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6th January 2024 (12 Topics)

NSO’s GDP estimates: On the upside

Context:

The Indian economy is estimated to grow at a healthy 7.3 per cent in the ongoing financial year, up from 7.2 per cent last year, as per the first advance estimates released by the National Statistical Office.

Economic Growth Estimates

  • NSO's Upbeat Projection: NSO forecasts 7.3% growth, surpassing most analysts' and RBI's estimates.
  • Growth Trends: Estimated 7% growth in the latter half, but potential revisions due to incomplete year data.
  • Sector-wise Analysis: Agricultural slowdown to 1.8%, contrasting with stronger industrial growth of 7.9% and a service sector drop to 7.7%.

Sector-wise Performance

  • Agricultural Sector: Expected decline to 1.8%, yet better than anticipated during El Nino.
  • Industrial Growth: Rise to 7.9%, fueled by robust manufacturing and construction activities.
  • Services Sector: Downturn to 7.7%, attributed to reduced performance in trade, hotels, transport, and communication.

Consumption, Investment, and Fiscal Outlook

  • Consumption Weakness: Sluggish private consumption at 4.4%, possibly linked to subdued wage growth.
  • Investment Activity: Expected growth at 10.3%, though government spending might decline during upcoming elections.
  • Fiscal Projections: Nominal GDP growth at 8.9%, potentially impacting fiscal deficit ratio, likely edging to around 6% of GDP.
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