India’s real GDP growth will exceed 7% growth in FY23: Finance secretary

The government is confident that India’s real gross domestic product (GDP) growth will exceed 7 per cent in 2022-23 (FY23), Finance Secretary T V Somanathan said on Wednesday. This will make it the world’s fastest-growing major economy.

Somanathan and Economic Affairs Secretary Ajay Seth were briefing the media after the release of April-June quarter (first quarter, or Q1) GDP data.

Seth said the goods and services tax (GST) collections for August are expected to be around Rs 1.42 trillion, making it the sixth consecutive month that GST collections will cross the Rs 1.4-trillion mark.

India’s economy grew 13.5 per cent in Q1FY23 — the fastest in four quarters — on account of better performance by the agriculture and services sectors, revealed official data. It was, however, lower than the Reserve Bank of India’s (RBI’s) Q1FY23 GDP forecast of 16.2 per cent.

“13.5 per cent in Q1 is good enough to achieve what everyone, including the RBI, International Monetary Fund (IMF), and others, is expecting. We are on course to achieve more than 7 per cent GDP growth throughout the year. It is expected to be between 7 per cent and 7.5 per cent,” said Somanathan.

The RBI has projected a real GDP growth of 7.2 per cent, while the IMF has projected a 7.4 per cent GDP growth for India in FY23.

“On demand side, real Gross Fixed Capital Formation, as a percentage of GDP, stood at 34.7 per cent — the highest in Q1 in 10 years. Private Final Consumption Expenditure has also revived and its share in GDP stood the highest in Q1 in a decade, supported by various measures undertaken by the government to boost consumption in the past two years,” said Seth.

Seth said GST collections in August are likely to grow 27 per cent year-on-year (YoY) to more than Rs 1.42 trillion, crossing the Rs 1.4-trillion mark for six successive months since March 2022.

“The growth in collections was supported by robust growth in economic activity, along with various measures undertaken to prevent anti-evasion activities and encourage better compliance. Sustained growth in GST collections indicates that the growth momentum of the Indian economy has sustained even beyond Q1FY23,” he said.

“The volume of e-way bill generation in August 2022 registered YoY growth of 15 per cent to Rs 7.56 crore, indicating robust domestic economic activity. This shows robust economic activity in the movement of goods and tax collections,” said Seth.

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