February 2024
What’s going to drive India’s 7%+ economic growth in FY24? Discover the sectors & themes that are set to be India’s next growth engine.
India continues to grow at over 7% for a 3rd straight year on the back of strong fundamentals. India is the fastest growing economy in the G-20 group and is expected to grow at 7.3% in the current fiscal. What’s helping India maintain this momentum when global average growth rate is a mere 2.7%.
The Indian economy is stably placed on a tripod of robust domestic demand coupled with investment in physical and digital infrastructure. A strong financial sector coupled with business reforms has set the stage for the 7%+ growth trajectory. Physical infrastructure creation is helping convert private investments into output quickly while digital infrastructure is improving institutional efficiency.
How can we be so sure that the Indian economy will actually grow at over 7%?
If you look at the key growth drivers of the Indian economy at this juncture, this is no rocket science to crack. If the fundamentals are strong, the growth is bound to happen. All the high-frequency indicators are up at this point for the Indian economy.
Except for agriculture, there are signs of a balanced recovery when you analyse the profile of sectoral growth. The Government is leading growth from the front by emphasizing capital expenditure, primarily aimed at augmenting infrastructure. This in turn has a cascading effect driving growth in several other sectors.
While infrastructure has grown at 31% in the first eight months of FY24, it has had its rub-off on other leading growth sectors. Construction has grown at 10.7%, financials, real estate and professional services growing at 8.9% while defense and public administration growing at 7.7%. Similarly, take a look at the manufacturing sector which is nearly 17% of our GDP. It is slated to grow at 6.5% in FY24 as against its 1.3% growth rate in FY23.
The Indian Economic Outlook
The accelerating FDI inflows into India over the last decade is indicative of a favourable long-term growth outlook for India. A young demographic profile coupled with rising urban household incomes is working in favour of the Indian economy. India’s nominal GDP is forecast to rise from $3.5 trillion in FY22 to $7.3 trillion by 2030, overtaking Japan to become the 2nd largest economy in the Asia-Pacific region by 2030. We’ve already overtaken some of the European economies like UK and France. By 2030, India’s GDP is likely to surpass the GDP of Germany.
India is likely to remain as one of the world’s fastest growing economy in this decade. India will become one of the preferred long-term growth markets for multinationals across multiple industries both in manufacturing like auto, electronics and chemicals as well as in services like banking, insurance, health care, asset management and information technology.
Given the Indian economic outlook, are you ready to be a part of this growth story? Where do you start from and how do you identify the right investment opportunities within the India growth story narrative?
That’s where the Investment Sprouts team comes in to pick the right investment opportunities at the right valuation.
Call us for a free assessment of growth opportunities for your portfolio.