The JP Morgan Global Composite
Purchasing Managers’ Index (PMI) has shown a notable uptick since October 2023,
reflecting quicker expansion in both manufacturing and service sectors. By May
2024, the global manufacturing PMI reached a 23-month high, signaling a robust
recovery and growth in the global economy. India's real GDP grew by 8.2% in
FY24, marking the third consecutive year of growth exceeding 7%. This sustained
growth has been driven by stable consumption demand and steadily improving
investment demand. On the supply side, gross value added (GVA) at 2011-12
prices grew by 7.2% in FY24.
In FY24, the shares of
agriculture, industry, and services in the overall GVA at current prices were
17.7%, 27.6%, and 54.7%, respectively. This distribution highlights the
dominant role of the services sector in India's economy, followed by industry
and agriculture.
Private Sector Investment
Trends
Private sector Gross Fixed
Capital Formation (GFCF) in machinery, equipment, and intellectual property
products has grown cumulatively by only 35% in the four years leading to FY23.
Conversely, GFCF in dwellings, other buildings, and structures increased
significantly by 105%. This indicates a stronger focus on real estate and
infrastructure investments by the private sector.
The financial performance of
the Indian corporate sector has reached unprecedented levels. An analysis of
over 33,000 companies shows that between FY20 and FY23, profit before taxes
nearly quadrupled. Additionally, the corporate profits-to-GDP ratio reached a
15-year high in FY24. Corporate profit for the Nifty-500 universe surged by 30%
last fiscal year, climbing to ₹14.11 lakh crore from ₹10.88 lakh crore in FY23.
Meanwhile, nominal GDP grew by 9.6% year-on-year to ₹295 lakh crore.
The Union government’s tax
cuts in September 2019 were aimed at facilitating capital formation. In
response, the private sector's non-financial GFCF grew by 52% in current prices
between FY19 and FY23. During the same period, general government GFCF, including
states, grew by 64%. While the gap is not substantial, it warrants attention.
The data from the Economic
Survey Analysis Series II highlights the significant growth and investment
trends across various sectors in India. The private sector has played a pivotal
role in driving this growth, with substantial investments in infrastructure and
intellectual property. However, to sustain this momentum, there is a need for
balanced growth in hiring and worker compensation to ensure a steady demand for
goods and services. The government's policies, aimed at facilitating capital
formation, have shown positive results, and continued focus on these areas will
be crucial for maintaining India's economic growth trajectory.
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