India has been a picture of resilience when it comes to its economy. No matter how vicious the headwinds, the engines of the economy keep chugging along. Take, for instance, exports, both of merchandise and services. The country clocked an impressive USD 499.46 billion in exports during April-November 2023, demonstrating remarkable stability and only a slight dip from the USD 506.52 billion recorded in the same period in 2022.
Or take the case of direct tax collections for the financial year 2023-24. Provisional figures as of December 17, 2023, stand at Rs 13,70,388 crore, which is 20.66 per cent higher compared to Rs 11,35,754 crore collected during the corresponding period of FY2022-23. The net direct tax collection of Rs 13,70,388 crore includes Corporation Tax (CIT) of Rs 6,94,798 crore (net of refund) and Personal Income Tax (PIT) including Securities Transaction Tax (STT) of Rs 6,72,962 crore (net of refund).
The provisional figure for gross collection of direct taxes (before adjusting for refunds) for FY 2023-24 is equally impressive at Rs 15,95,639 crore. This marks a significant growth of 17 per cent over the collections of FY23. This Rs 15,95,639 crore includes Corporation Tax (CIT) of Rs 7,90,049 crore and Personal Income Tax (PIT) including Securities Transaction Tax (STT) of Rs 8,02,902 crore.
Among the various collections, Advance Tax for FY 2023-24 reached Rs 6,25,249 crore as of 17.12.2023, reflecting the nation's strong economic activity. This is 19.94 per cent higher compared to the corresponding period in FY 2022-23, underlining the positive momentum in the Indian economy. It comprises Corporation Tax (CIT) of Rs 4,81,840 crore and Personal Income Tax (PIT) of Rs 1,43,404 crore, reflecting a diverse and flourishing economic landscape. Refunds amounting to Rs 2,25,251 crore have also been issued in FY 2023-24 till 17.12.2023.
Decoding the numbers, D.K. Srivastava, Chief Policy Advisor, EY India says: “On the fiscal side, direct tax revenues have performed exceptionally well so far in FY24 with a growth of 24.1 per cent during April-October 2023. Central government’s decision to frontload capital spending in this year, which grew 33.7 per cent during the first seven months and is budgeted to grow 37.4 per cent for FY24, has served as a prime driver of growth.”
Growth Optimism
The economy, as per the latest projections of the central bank, is expected to grow at 7 per cent in FY24 in spite of the ongoing global geopolitical uncertainties. The central bank had earlier forecast a growth of 6.5 per cent. The ADB, in its December 2023 release of the Asian Development Outlook has projected India’s growth at 6.7 per cent for FY24.
Some of the high frequency indicators confirm this growth optimism. In November 2023, both manufacturing and services PMI remained at high levels of 56 and 56.9 respectively. Robust sales of automobiles are yet another strong indicator that bodes well for 2024.
As per the Federation of Automobile Dealers Association (FADA), during the 42-day festive period of CY2023, the domestic automotive sector reached a new milestone with vehicle sales climbing to 37.93 lakh, a 19 per cent increase over 31.95 lakh units sold during the same period last year. “Significant growth was observed in the two-wheeler, three-wheeler, commercial vehicles and passenger vehicles. Rural areas contributed to the surge in two-wheeler purchases. Despite initial underperformance during Navratri, particularly in the passenger vehicle sector, the situation improved by Deepawali, ending with a 10 per cent growth rate,” says Manish Raj Singhania, President, FADA.
The foreign direct investment (FDI) inflows registered its highest ever annual inflow of $85 billion in FY22. During FY23, provisional estimates have reported FDI inflows of $71 billion. During the current financial year (up-to September 2023) FDI worth $33 billion has been reported. The government expects substantial increase in FDI inflows in 2024.
PLI Booster
The recently introduced Production Linked Incentive (PLI) schemes for 14 key sectors have seen 746 approved applications and PLI units in 150+ districts across 24 states, with a total investment of more than Rs 95,000 crore reported till September 2023. This has resulted in Rs 7.80 lakh crore production/sales, employment generation for over 6.4 lakh people, and a boost in exports by Rs 3.20 lakh crore. The government anticipates further growth in these figures in 2024.
Open Network for Digital Commerce (ONDC) is another mega initiative that is likely to flourish next year and beyond. Latest data shows ONDC recorded more than 6.3 million transactions in November 2023 across more than 600 cities over 2.3 lakh sellers and service providers were active on the ONDC network.
The Index of Eight Core Industries (ICI) gauges eight sectors like cement, coal, crude oil, electricity, fertilisers, natural gas, petroleum refinery products, and steel, collectively constituting 40.27 per cent of the Index of Industrial Production. In FY23, the ICI showed a 7.8 per cent annual growth, surpassing the 1.5 per cent average from FY20 to FY22.