India Growth Prospects- 2024

India is said to be on a path of growth. In the recent economic release, the GDP release for Q2 showed a massive number of 7.6 percent, which is said to be higher than expected compared to the projected figures. It is said to be driven by the manufacturing and construction sectors of the nation. From the data, India could be in a difficult position due to the geo-political tensions across the globe.

With the release of the GDP numbers, the Indian stock market showed a positive trend. Many sectors like- hospitality, and transport -stocks showed good earnings during the week. Growth was possible due to the increased Capital expenditure, which drove the gross capital formation and the consumption expenditure in the recent month. Though the news of growth is said to be positive, some of the sections of the economy are not showing a positive sign. Growth in agriculture is said to be on a downward trend. With the falling exports and uncertainty of the monsoon, the sector is low.

Indian economy is poised to become the third largest economy in the world by 2027, according to IMF estimates, and the second largest economy by 2047. India needs to clock in at least 6.5% growth on a year-on-year basis to reach at least the first milestone. The recent GDP figures show great hope to them in this regard. 

Major growth drivers?

Domestic consumption is poised to be a pivotal driver of India's prospective economic growth. As one of the most populous nations globally, India offers a substantial foundation for cultivating an extensive consumer base, rendering it an attractive prospect for foreign investors. The Micro, Small, and Medium Enterprises (MSME) sector has exhibited remarkable growth in recent years and is anticipated to sustain this trajectory. Private consumption has demonstrated robustness this year, manifesting a year-on-year growth of 7.8%. This consistent momentum, upheld over the past five quarters, can be attributed to the crowding-in effect facilitated by increased government capital expenditure throughout the year. The prevailing high GDP growth underscores the resilience of the Indian economy, notwithstanding the challenges posed by rate hikes. An optimistic outlook for 2024 is warranted, as global demand is expected to rebound significantly. This resurgence is poised to augment export earnings, which experienced relative weakness in the preceding year.

Furthermore, a notable surge in Foreign Direct Investments (FDI) is anticipated for India, a facet that had not exhibited significant lustre in comparison to prior years. The recent inclusion of India in the JPM Emerging Markets Index is anticipated to generate an estimated annual inflow of $26 billion, providing a boost to India's balance of payments. The absence of major political uncertainties in the upcoming year and the maintenance of subdued consumer prices, the optimistic economic projections for India are contingent upon these factors. The recent positive deviation in GDP figures may prompt the government and prominent researchers to revise their GDP forecasts for the ensuing year.