Economy likely to see good vibes in '24

Strong likelihood of 7% average growth and reduction in geopolitical uncertainties are among the defining features of the new calendar year

- Gireesh Chandra Prasad, Rhik Kundu, & Dhirendra Kumar

A boost to government spending and consumption in the wake of national polls, geopolitical uncertainties coming off from the peaks seen this year and a strong likelihood of 7% average expansion of the economy are likely to be the defining features of the new calendar year starting 1 January, according to economists.

After 7.7% expansion in the April to September period this year, the economy is expected to sustain the growth momentum in the coming quarters at a comparable pace, economists said. According to D.K. Srivastava, chief policy adviser at EY, the Indian economy is expected to see a 7% expansion in the January to December period of 2024. If one looks at FY25, the growth is expected to be in the range of at least 6.5-7.0%, said Srivastava. “On the whole, there would be positive vibes in the economy," said Srivastava.

One key development expected next year that would define Centre-state fiscal relations over the five years from 2026 would be the commencement of the Sixteenth Finance Commission’s consultations. The Commission will hold extensive discussions across the country to decide on the share of states in Centre’s divisible pool of tax revenue and how to apportion it among states. The commission is expected to start deliberations soon after the elections.