New Delhi, Dec 30 (KNN) The Finance Ministry, in its half-yearly economic review report released on Friday, anticipates that India's economy will comfortably exceed the government's growth projection of 6.5 per cent for the fiscal year 2023-24 (FY24).

According to the report, the momentum gained by the Indian economy in the second quarter of FY24 is expected to endure through the subsequent December quarter, with sustained growth in consumption demand.

The half-yearly economic review for 2023-24 highlights a significant real Gross Domestic Product (GDP) growth of 7.7 per cent in the first half of FY24, following a 7.6 per cent expansion in the second quarter (Q2).

As per the report, strong domestic consumption and investment are cited as the driving forces behind this growth, with Private Final Consumption Expenditure (PFCE) experiencing a 4.5 per cent increase, contributing 60.4 per cent to GDP—its highest in H1 since FY12.

“The better-than-expected growth in Q2 of FY24 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 report noted.

The Finance Ministry report also expresses optimism about India's external sector, citing the relatively stable Indian rupee and adequate foreign exchange reserves.

On the inflation front, the report notes a declining trend in headline inflation, attributing it to stable core inflation and ongoing deflation in fuel inflation.

Despite temporary disruptions from food prices, the Reserve Bank of India (RBI) projects an average inflation rate of 5.4 per cent for FY24.

On indirect taxes, the report underscores the momentum in economic activity through GST collections.

The gross GST collection for November 2023, at Rs 1.68 lakh crore, is 12 per cent higher on a YoY basis.

The report concludes with information on merchandise exports, which contracted by 8.8 per cent in H1 of FY24, leading to a reduction in India's overall trade deficit to USD 39.9 billion compared to USD 75.3 billion in H1 of FY23.

(KNN Bureau)