India’s private consumption, investments grow

New Delhi: India is witnessing an unprecedented pick-up in private consumption and investment, reported the World Bank in its recent report. It has also said that the growth of services in the country is strong to provide jobs to the people and the overall growth rate of the economy would be stupendous taking into view the overall global growth rate.

World Bank President Ajay Banga said that employment is the surest way to reduce poverty and spread prosperity. India's economic growth accelerated to 6.1 per cent in the March quarter from a year earlier as a recovery in private investment and domestic consumption offset the drag from softening global demand, reported Reuters.

 "March 2023 quarter GDP growth surprised positively at 6.1 per cent YoY vs our 5.4 per cent estimate. In sequential, seasonally adjusted annualized terms, the economy picked up to 10 per cent, helped by most segments on the supply side. Meanwhile, investments and net exports played a key role on the demand side of GDP. This growth has come in spite of higher interest rates and weaker real income growth. Both parameters are likely to see improvement in the quarters ahead which should help sustain the robust pace of activity," said Prithviraj Srinivas, Chief Economist, Axis Capital, Mumbai.

 "The main reason for the better-than-expected performance has been significant traction in fixed investment and exports on the demand side and construction and trade, hotel & hospitality on the supply side. Private consumption remains the main source of disappointment," Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers, Mumbai.

 "Going forward, we expect India's growth to remain around 6 per cent for the financial year ending March 2024. Despite the likely slowdown during the current financial year, we expect at least modest pickup in private consumption demand. The compulsions of fiscal consolidation can depress final consumption demand by government. Barring better-than-expected acceleration in private capital expenditure, we would also expect deceleration in the growth of fixed investment," he added.

 India's foreign direct investment (FDI) flows may pick up only modestly in fiscal 2024 after a fall seen in the first 10 months of fiscal 2023, economists at Citi said in a note, as reported by Reuters. Citi expects net FDI flows – which include both outflows and inflows – to be at US$35 billion in fiscal 2024. This is on the back of manufacturing FDI likely seeing some traction from government schemes and "the build-up of ecosystem around recent large greenfield investments," Samiran Chakraborty and Baqar Zaidi wrote in the note.