FY24 marks third year of 7% plus growth as global economy struggles: FinMin

Ahead of the General Budget on February 1, the Union Finance ministry on Thursday said FY24 marks the third successive year of 7% plus "strong" growth of the Indian economy even as the global economy struggles to grow at more than 3%. The finance ministry said "exporting" one's way to growth is no longer easy given the global challenges.

"Exporting one's way to growth is no longer easy amid onshoring and friend-shoring of production, increasing vulnerabilities of global supply chains and the legacy of twin-global shocks," the ministry said in a note on the Indian economy, adding that it is drawing strength from multiple pillars in the last ten years like public sector capital investment, inclusive development, Covid management, structural reforms, clean up of the financial sector, and GST, IBC and digitalization, among others.

"India’s unwavering commitment to ensuring steady economic growth is generating resources for investment needed for climate change adaptation, building resilience, and mitigating emissions," the ministry said.

"The public sector capital investment has surged in the last ten years, the financial sector is healthy, and non-food credit growth is strong, enabling the Indian economy grow at a brisk rate. Greater inclusive development, much lower unemployment rate, and moderate inflation mark the journey from fragility to stability and strength during the last 10 years. The government’s COVID management, mature stimulus measures and the monumentally successful vaccination launched the return of the economy to a high-growth path," it added.  

"The structural reforms implemented since 2014 have strengthened the macroeconomic fundamentals of the economy. The reforms undertaken to strengthen the financial sector have helped clean up the balance sheets of banks and corporates and emboldened banks to resume lending to all sectors of the economy," the ministry said.  

"The unification of the domestic markets brought in by the adoption of the GST has incentivized production on a larger scale, enhanced economic efficiency while reducing logistics costs," it added.  

The ministry said the country’s robust digital public infrastructure has transformed the authentication ecosystem, reducing the cost of conducting e-KYC from ₹1000 to $5. “It has also enabled online, paperless, and cashless digital access to various public and private services. The proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of the middle class, have propelled the e-commerce market, with ONDC opening global markets for even the smallest business,” the ministry said adding India is the third-largest fintech economy in the world after the USA and the UK.