Budget 2024: Nirmala Sitharaman redefines GDP, focuses on more comprehensive approach

by edwardofairbanks

Synopsis

Interim Budget 2024: In a significant move during the presentation of the interim budget for FY25, union finance minister Nirmala Sitharaman has revamped the conventional understanding of GDP, now terming it as ‘governance, development, and performance.’

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Union Finance Minister Nirmala Sitharaman on Thursday redefined the Gross Development Product (GDP) to ‘governance, development and performance’ while presenting the interim budget for FY25.

In her sixth budget presentation, Sitharaman said the government is equally focused on a more comprehensive GDP.

While talking about growth, Sitharaman said that impact of all round development has been seen in all sectors.


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On the growth front, the government in its first advance estimate said that the Indian economy is expected to grow 7.3 per cent on an annual basis in the current financial year. The Indian economy had grown by 7.2 per cent in FY23.

The economy was pegged to grow at 8.9 per cent in FY24 in nominal terms, compared to 16.1 per cent in the previous financial year, according to data released by the National Statistical Office. The government had revised FY24 GVA growth at 6.9 per cent YoY, down from 7 per cent in FY23.

The government in the report saw manufacturing industry growing at 6.5 per cent in FY24, up from 1.3 per cent registered in FY23. This sector accounts for around 17 per cent of India’s overall GDP.

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Agriculture, livestock, forestry & fishing growth, which contributes around 15 per cent to the GDP, was pegged at 1.8 per cent in FY24, down from 4 per cent in FY23.

The mining and quarrying industry, which grew at 4.6 per cent in FY23, was seen growing at 8.1 per cent in FY24.

Growth of trade, hotels, transport, communication & services related to the broadcasting industry was pegged at 6.3 per cent in FY24, down from 14 per cent in FY23.

The experts and analysts had expected the projected number to be around 7 per cent, higher than the previous government forecast, due to the Reserve Bank of India’s (RBI) revision of its GDP estimates. The RBI had increased its growth forecast in December to 7 per cent for FY24, from an earlier estimate of 6.5 per cent owing to the robust growth in high-frequency indicators.

The second advance estimate for FY24 is due to be released on February 29, 2024.

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