Growth: ‘Growth may be more than 6.5% in FY24’

NEW DELHI: Buoyed by the September quarter GDP estimates, the government sees an upside to its 6.5% growth projection for the current financial year as it expects the growth momentum to continue in the second half.
Chief economic adviser V Anantha Nageswaranalso asserted that going by the tax buoyancy – ratio of growth in tax collections to economic growth – GDP growth could be underestimated.Healthy direct and indirect tax collections have pushed the tax buoyancy to 1.9.
“Based on the first half experience, these numbers tell us that (tax) buoyancy is close to two (and) that we are probably still under-estimating our GDP growth and economic activity, contrary to several prejudices, which masquerade as opinions… We may be understating them rather than overstating them,” he told reporters.
The government’s chief economist appeared upbeat on the overall economic activity based on an assessment that urban demand remained resilient, while rural demand was “steady, if not spectacular”, with private sector investment kicking in and a moderation in inflation expected to boost consumption.
“These (GDP) numbers impart a certain upside to the 6.5% estimate for real GDP growth in the current financial year. But we will have to work the numbers to see what kind of upside this current number imparts to the full year estimate. Until then, we will keep the estimate at 6.5%, except to signal that we are now probably more comfortable with this number than we were before,” the CEA said, while noting that the 7.6% estimate for the second quarter was higher than the “most optimistic projection”.
He also said that price pressure has come down and argued that multiple parameters – from demand for capital goods to and fund raising by companies to support investment – indicated that private sector capital expenditure has started in the economy, which will further support growth. “…they tell us a story… private sector capital formation is not an aircraft that is waiting for take-off, but has already started to move and fly,” he said.

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