India’s economy continued its strong performance into FY24, maintaining the momentum built in FY23 despite facing a range of external challenges. The Economic Survey 2024, tabled by Finance Minister Nirmala Sitharaman at the start of the Budget session on Monday, revealed that India’s real GDP grew by an impressive 8.2 percent in FY24, surpassing the 8 percent mark in three out of four quarters.

The survey highlighted that India’s focus on macroeconomic stability played a crucial role in minimizing the impact of global challenges on its economy. This stability allowed the country to navigate through a global economic landscape characterized by varied growth patterns, domestic structural issues, geopolitical conflicts, and the effects of monetary policy tightening.

Global economic growth in 2023 was recorded at 3.2 percent, according to the April World Economic Outlook. However, this overall figure masked significant disparities among countries, driven by unique domestic issues and external pressures.

India’s economic resilience was bolstered by a strong emphasis on capital expenditure (capex) and a sustained increase in private investment, which propelled capital formation growth. The survey noted a 9 percent increase in Gross Fixed Capital Formation in real terms for 2023-24. Additionally, healthier corporate and bank balance sheets are expected to further strengthen private investment, while positive trends in the residential real estate market indicate significant growth in household sector capital formation.

Inflationary pressures, driven by global issues, supply chain disruptions, and monsoon variability, were effectively managed through administrative and monetary policy responses. Consequently, retail inflation decreased from an average of 6.7 percent in FY23 to 5.4 percent in FY24.

Despite the expansionary public investment, fiscal balances of the general government improved progressively. Enhanced tax compliance, procedural reforms, expenditure restraint, and increasing digitization contributed to this balance.

While subdued global demand for goods exerted pressure on the external balance, strong services exports largely offset this impact. The Current Account Deficit (CAD) improved to 0.7 percent of GDP in FY24, down from 2.0 percent of GDP in FY23.

The survey emphasized that India’s economy has not only recovered but also expanded in an orderly fashion post-pandemic. The real GDP in FY24 was 20 percent higher than its pre-pandemic level in FY20, a feat achieved by very few major economies. Looking ahead, the prospects for continued strong growth in FY25 and beyond appear promising, though they remain contingent on geopolitical, financial market, and climatic risks.