India's GDP growth for FY23 likely to be over 7.2%, says CEA Nageswaran

Private consumption as a share of GDP was at a 16-year high, the CEA added

V Anantha Nageswaran

CEA V Anantha Nageswaran

Ishita Ayan Dutt Kolkata

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Chief Economic Advisor V Anantha Nageswaran on Saturday expressed confidence that India’s GDP growth in FY23 may come in higher than 7.2 per cent once finalised in February 2026.

“India’s GDP growth estimates are presented six times, the final estimate for FY23 will actually be with us in January-February 2026. And my expectation and belief is that when the final number for FY23 is frozen in February 2026, it will be more than 7.2 per cent,” the CEA said in Kolkata at a session on “The Decade of India’s Growth and Prosperity – the Beginning” organised by the Bharat Chamber of Commerce.

“This is just the first reliable estimate of the GDP growth,” Nageswaran said. As more and more data become available to further revisions would be towards even more upside from 7.2 per cent because the momentum that the economy was carrying was “quite strong”, he added.

The provisional estimates released by the National Statistical Office (NSO) recently showed the overall economic growth in FY23 at 7.2 per cent. It was powered by a higher than expected growth in the fourth quarter.

Nageswaran said that in the fourth quarter, India’s GDP growth number (6.1 per cent) was higher than several leading nations – developing and developed. The GDP growth for FY23 was led by “robust” private consumption and sustained increase in capital formation, he said. 

Private consumption as a share of GDP was at a 16-year high, the CEA added. The post-pandemic catch-up was mainly driven by urban consumption, Nageswaran said, adding that the classification of what constitutes rural and urban India also keeps changing.  

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“Some pockets of consumption are not growing as strongly as other pockets of consumption but overall the aggregate consumption growth in the economy has caught up with the long-term trend which means that the pandemic-induced consumption slowdown is a thing of the past,” he said.

On rural demand, he said that it was beginning to turn around. With two months behind in FY24, the economy still carried a strong momentum, Nageswaran said.

Beyond FY24 and going into the medium term, Nageswaran said that the prospects for the economy were good. The reasons for the optimism were strong balance sheets of the corporate and banking sectors, pick-up in capital investment and digitisation of the economy.

In the last decade, the Indian corporate, banking and non-financial sectors were reducing debt making their balance sheets leaner, meaner and stronger, he said.

But now, companies were willing to invest and banks were willing to lend, Nageswaran said. “That means capital investments will happen creating employment and income growth.”

Responding to a query on the impact of artificial intelligence (AI) tools like ChatGPT on jobs, the CEA said that at this point, it could be a possible source of growth for a country like India.

“Given our growth and given the fact that we are still climbing from lower middle income to middle income it actually opens up capacity and potential for our own IT-enabled enterprises to take on more assignments and more projects. So it can be therefore employment generating rather than employment reducing at this point,” Nageswaran said.

In that sense it may not be a lose-lose proposition, it can be a win-win proposition, he said, adding, “provided we are able to upskill and make our people take advantage of these tools”. 

However, the CEA also said that over a longer period it might have implications for certain industries and job creation. A multi-pronged approach was required to harness its benefits and limit the negative impacts, he said. 

First Published: Jun 10 2023 | 6:28 PM IST

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