Michelle ThompsonIndia has announced impressively strong economic growth figures, concluding 2023 on a positive note and providing significant momentum for Prime Minister Narendra Modi just ahead of a nationwide election.
The country’s statistics office reported a robust 8.4% surge in Gross Domestic Product (GDP) for the final quarter of 2023 compared to the same period in the previous year. This growth surpassed analysts’ expectations and positioned India’s economy as the strongest among major economies in the last quarter of the year.
This data adds to the optimism surrounding India’s economic prospects. A report from real estate consultancy Knight Frank suggests a 50% increase in the number of ultra-rich Indians, those with a net worth of at least $30 million, by 2028, the highest global increase.
While the International Monetary Fund projects a 6.5% expansion for India’s economy in 2024, the Modi government is more optimistic, estimating a 7.6% growth rate for the fiscal year ending in March.
Modi hailed the robust GDP growth, emphasizing its significance for the nation’s development. He expressed his commitment to sustaining fast economic growth to improve the lives of India’s vast population.
India’s sustained economic expansion is expected to propel it to become the world’s third-largest economy by 2027, according to analysts at Jefferies. The country’s attractiveness as an alternative to China for supply chain diversification is also increasing, particularly amid strained relations between Washington and Beijing.
The Modi government has actively courted multinational corporations to establish manufacturing facilities in India, while also investing heavily in infrastructure development.
Despite the optimism, economists urge caution when interpreting the growth data. Nomura cautioned that underlying growth might not be as strong as suggested by the headline figures, with consumption lagging and the agriculture sector underperforming.
HSBC economists stressed the need for calm despite India’s remarkable growth pace, highlighting the country’s resilience amid global volatility.
While Capital Economics’ Thamashi De Silva acknowledged a potential moderation in India’s economic momentum due to global factors and tighter lending restrictions, she believes any slowdown will be mild, supported by the government’s infrastructure initiatives.
