India’s Q4 GDP growth surges to 7.8%, while FY24 sees a robust 8.2% expansion.

The Indian economy grew strongly in the fourth quarter of fiscal year 2023–24, expanding by 7.8% year over year. This outstanding accomplishment was reinforced by strong government spending and resilient consumer demand, resulting in a full-year GDP growth rate of 8.2%, according to preliminary figures released on May 31.

Government spending boosts economic growth.

The Union government played a critical role in this economic rise, with capital expenditure reaching Rs 9,48,506 crore in 2023–24, which closely matches the revised forecast of Rs 9,49.555 crore. This enormous investment, particularly in infrastructure, was critical to maintaining the rising pace.

Sectorial Contributions

The Ministry of Road Transport and Highways, along with the Ministry of Railways, made the largest contributions to capital expenditure. The Road Transport Ministry alone spent Rs 2.643 lakh crore, over 99.93% of its revised allocation, a huge increase over the previous year’s Rs 2.38 lakh crore. Despite missing the aim of developing 13,800 kilometers of national roadways, the ministry met its second-highest milestone of 12,349 kilometers, stressing quality improvements in road construction.

“This year marks the highest-ever construction of four-lane and high-speed access control roads, reflecting significant advancements in road quality and speed,” said Anurag Jain, secretary of the MoRTH.

The Impact of Monsoons and Elections

Despite these gains, economic activity were temporarily disrupted by strong monsoon rains in July and August, which hampered formation work. Furthermore, the rate of capital expenditure approvals and implementations increased in March 2024, ahead of the forthcoming Lok Sabha elections, with Rs 1,42,893 crore used versus Rs 1,49,292 crore in March 2023.

Future Outlook

Looking ahead, the government’s focus on infrastructure development is projected to continue, with Rs 11.1 lakh crore set aside for capital expenditure in FY25. This continuous push for capex is expected to boost long-term economic growth and infrastructure upgrading.

Challenges and observations.

However, issues remain. Earlier estimates suggested that India would miss its revised capital expenditure target for 2023-24 due to states’ somewhat reduced usage of infrastructure loans and a delay in investment caused by election activity. Despite these challenges, the overall performance of the economy remains solid, indicating a well-balanced approach to economic management.

Conclusion:

India’s remarkable GDP growth in Q4 and fiscal year 2023-24 demonstrates the importance of targeted government spending and strong consumer demand in driving economic growth. As the government prepares for the upcoming fiscal year, continuous investment in infrastructure and strategic economic policies will be critical to maintaining the current growth trajectory and establishing long-term economic stability.