India GDP grew by 9.7% in H1FY23, says Finance Ministry

India’s gross domestic product growth in the first half of the current fiscal year averaged at 9.7 per cent, the finance ministry said in its mid-year expe¬nditure and revenue state¬ment on Tuesday.

The ministry said it could not present the medium-term expenditure framework (MTEF)¬, as mandated by the Fiscal Respon¬sibility and Budget Manage¬ment Act, because the global macro-economic situation disrupted the government’s projections. “India’s economic growth, measured by growth in GDP at constant prices, has been estimated at 9.7 per cent for the first half (April-September) of FY23, as compared to 13.7 per cent in H1FY22 and 4.7 per cent in H2 of FY22,” the ministry said.

On the MTEF, it said the FRBM Act states that if any deviation is made in meeting the fiscal obligations cast on the central government under this Act, the minister-in-charge of the finance ministry shall make a statement in both Houses of Parliament explaining any deviation in meeting the obligations.

“As per Section 3 (1B) of the FRBM Act, 2003, the MTEF Statement needs to be laid in the Parliament in the session immediately following the session of Parliament in which the Medium Term Fiscal Policy Statement, the Fiscal Policy Strategy Statement and the Macro-Economic Frame¬work Statement are laid.” The three statements were laid in the Budget session.

“During preparation of the MTEF statement, assumptions have to be made regarding the growth rate of the economy and tax and non-tax rec¬eipts of the Govern¬ment to come up with meaningful expenditure projections. Three continuous Covid-19 waves, Russia-Ukraine conflict, and global economic uncertainties have affected almost all macroeconomic indicators, making synchronisation between the Budget and medium-term goals difficult,” it said.

The ministry said that while expenditure projections for the year factored in GDP growth, and various obligations, effective management of the exogenous shocks and global uncertainties requires the additional flexibilities in terms of expenditure management and fiscal consolidation. “Since the MTEF statement requires rolling targets for expenditure lines for the next two financial years, the normative increase will be based on the anticipated expenditure of the current fiscal year.”

“In the current financial year, the expenditures to stabilise the economic growth and also catering the needs of marginally weaker sections of the country amid the external economic shocks have pushed the expenditure upward. Therefore, any projections amidst global turbulence, having consequence on all major economies, may bring risk of considerable gap between projected numbers and actuals therein,” it said.

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