India sees GDP growth to surpass 6.5% in 2023-24

The government expects the Indian economy’s GDP growth rate in 2023-24 to “comfortably” exceed its forecast of 6.5 per cent despite the risks to growth and stability outlook that mainly emanate from outside the country, according to the Finance Ministry’s half-yearly economic review report, released on Saturday.

The better-than-expected growth in Q2 of 2023-24 and the emergence of India as the fastest-growing major economy in H1 of FY24 have improved the growth prospects and prompted various domestic and international agencies to upgrade GDP growth projections for FY24.

The momentum gained in Q2 of FY24 is likely to be sustained in Q3 as well.

High frequency indicators in India for October and November 2023 reflect robust economic activity.

PMI Manufacturing and Services remained in the expansionary zone in October and November.

October 2023 imprints of the IIP and Index of Eight Core Industries also highlight sustained growth in manufacturing activity, the report points out.

Sentiments in the services sector remain upbeat, driven, among others, by an upswing in the tourism cum hotel industry induced by leisure travel, business travel, and social events.

Growth in consumption demand is expected to be sustained. Urban demand conditions remain resilient, with higher growth in auto sales, fuel consumption and UPI transactions.

Rural demand is also catching up, as reflected in robust growth in two and three-wheeler sales, it adds.

On the inflation front, with the stable downward movement in core inflation and continuing deflation in fuel inflation, the headline inflation outlook is on a declining trend, notwithstanding temporary disruptions from food prices. RBI has projected inflation to average at 5.4 per cent in FY24.

The outlook for India’s external sector is promising, as seen in the November releases of trade balances for both services and merchandise. The relatively stable Indian rupee against the US dollar and other prominent currencies and adequate foreign exchange reserves add to the optimism.

This sanguinity is visible in the resurgence of foreign portfolio investments since November 2023 and in FY24 in general, compared to FY23.

Foreign investment inflows are also helping the Indian stock market indices to climb new heights, reflecting broad-based optimism on growth among domestic and foreign investors on growth prospects, according to the report.

 Leading Indian tech industry leaders said on Saturday that the coming year presents an exciting opportunity for purpose-driven organisations to better serve their communities as we advance in ways of using AI which will require more funding and expertise.

In the next year, businesses will transform the way they measure performance and productivity to focus on outcomes like products launched or leads generated, instead of inputs. “Business leaders have a responsibility to ensure that their teams are equipped with the right resources and support to take advantage of unprecedented opportunities that AI offers,” said Arundhati Bhattacharya, Chairperson and CEO, Salesforce India.

“AI will be felt through enhanced productivity within these ever-changing business models. In short - AI will touch every aspect of the tech industry and the markets they serve,” she added.

According to a recent Nasscom study, AI and automation have the potential to add up to $500 billion to India’s GDP by 2025.

“On the Generative AI front, we expect it will hypercharge efficiency, and we will all get familiar with the term “semantic query” and advancement in semantic query (essentially a question written in a ‘human’ language that then gets translated into machine language) which will dramatically change customer service,” said Bhattacharya.

Businesses can provide quick and meaningful, hyper-personalised service with AI using text, images, videos, and audio for search. Throughout 2024, semantic query will become a cornerstone for AI, according to industry leaders.

Generative AI (GenAI) is expected to generate economic value worth $2.6-$4.4 trillion annually, of which around 75 per cent is expected to be concentrated in software engineering, customer operations, product and R&D, and sales and marketing, which are core service lines of many technology service providers in India, according to a recent report by Nasscom in association with McKinsey & Company.

According to Bikram Singh Bedi, Managing Director, Google Cloud, India, “We sit in a unique position to help businesses innovate with generative AI with our advanced models and continue to help businesses solve complex problems and transform in this new AI era.”

Agencies