The fourth quarter of FY23 saw stronger-than-anticipated growth, primarily fueled by robust domestic investment. This impressive performance prompted the International Monetary Fund (IMF) to revise India’s real GDP growth projection for FY24 upwards by 20 basis points in its July 2023 World Economic Outlook (WEO).
The strength of domestic investment can be attributed to the government’s unwavering commitment to capital expenditure, poised to be a driving force for future growth. In the FY24 Budget, the Union Government raised capital outlay by a significant 33.3%, increasing the proportion of capital expenditure in total expenditure from 12.3% in FY18 to 22.4% in FY24 (BE). The Union Government’s initiatives have also encouraged states to boost their capital expenditure, with state capital spending rising by an impressive 74.3% year-on-year in Q1 of FY24, complementing the Central Government’s 59.1% increase in the same quarter
