The finance ministry expects the Indian economy's GDP growth rate in 2023-24 to "comfortably" exceed its forecast of 6.5 percent following the blockbuster data for July-September.
"Risks to growth and stability outlook mainly emanate from outside the country. Nonetheless, the Indian economy is expected to comfortably achieve a growth rate upwards of 6.5 percent in 2023-24," officials from the the ministry's Department of Economic Affairs said in the half-yearly economic review report, released on December 29.
Also Read: RBI model pegs India's FY25 GDP growth at 6.0% vs official view of 6.5%
Data released on November 30 by the statistics ministry showed India's GDP growth rate came in at 7.6 percent in July-September, significantly higher than economists' expectations of 6.8 percent. Days after the release of the data, the Reserve Bank of India (RBI) raised its growth forecast for 2023-24 by 50 basis points to 7.0 percent.
One basis point is a hundredth of a percentage point.
While the finance ministry was expected to follow suit - Chief Economic Adviser V Anantha Nageswaran had, on November 30, hinted at an upward revision in the upcoming economic review report - it has only said growth will easily exceed its forecast without providing a new number.
In its half-year economic review report, the finance ministry also said that high-frequency data for October and November suggested economic activity in the third quarter of 2023-24 has been robust and is "likely to continue in Q4 as well".
"While urban consumption continues to be the key driver of consumption growth, rural demand has also shown a strong pick-up. These trends signal continued momentum in the coming months," the finance ministry's report said.
At the same time, the ministry's report warned that geopolitical developments continue to impact India's external sector, with India's goods exports shrinking in the first half of the current financial year compared to last year amid an economic slowdown in India's key trade partners.
Also Read: India's current account deficit narrows to $8.3 billion in July-September
On prices, the finance ministry admitted that while India's "relatively high food inflation…is a matter of concern, it is important to mention that the present rate of increase in prices is a worldwide phenomenon".
"While India recorded 6.6 percent food inflation in October, the UK is still grappling with 10.1 percent, Japan at 9.8 percent, and South Africa at 9 percent food inflation," the ministry said.
According to latest data released on December 12, India's food inflation rose to 8.7 percent in November.
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