India's Q2 growth rate highest in world; fundamentals strong: FM Sitharaman

Addressing the winter session of the Parliament on Thursday, Finance Minister Nirmala Sitharaman stated that not only India was the fastest-growing economy in the world but also it had the highest growth rate in the second quarter of the current financial year (Q2FY24) in the world.

The finance minister spoke on the progress made by the Indian economy under the Prime Minister Narendra Modi-led central government, stating that the country's economy had grown from the tenth largest in 2014 to the fifth largest economy in 2023. Moreover, India had the most significant growth in the July-September quarter at 7.6 per cent.

Sitharaman said, "India's second quarter growth is the highest in the world as India continues to be the fastest-growing economy. The third and fourth largest economies (Japan and Germany) have contracted as well as emerging economies. In comparison, India's over 7 per cent growth is significant."

Make in India programme and PLI schemes driving manufacturing

The finance minister also informed the Rajya Sabha that the manufacturing sector in India had registered its highest growth of 13.9 per cent in Q2FY24. Sitharaman credited this to the "Make in India" initiative by PM Modi as well as the numerous production-linked incentive (PLI) schemes launched under the Bharatiya Janata Party (BJP) government.

"All sectors are growing significantly. Because of the Make in India programme and PM Modi's schemes, the manufacturing sector is also significantly contributing to the economy. The manufacturing sector is contributing 13.9 per cent to the economy. The PMI (Purchasing Managers Index) in November was 56. It is in the expansionary territory, so sustained growth is indicative of the growth," she said.

She also warned not to compare India's PMI with global counterparts, as developed nations report contractionary numbers while India was in an expansionary stage.

India's exports resilient despite drop in global demand

FM Sitharaman stated that India had recorded a 9.43 per cent year-on-year growth in October 2023 at $62.26 billion. She said, "In spite of the consumption and demand coming down in western economies, our exports are doing well."

Moreover, India surpassed expectations by recording a 6.21 per cent increase in merchandise trade when the World Trade Organization (WTO) had predicted numbers to come down to 0.8 per cent.

Last year (2022-23), India was also reportedly the second-largest mobile phone manufacturer, with exports valued at $10 billion.
 

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Growth in direct tax 

Direct tax collection grew by 21.82 per cent this year, with monthly GST collections stabilising at Rs 1.6 trillion. This signals a sign of economic growth, the FM stated.

The FM also added, "States receive 100 per cent of state GST, nobody touches it." Adding that 50 per cent of integrated GST (IGST) also goes to states while 41 per cent of central GST (CGST) share is given to states based on the finance commission's recommendations.

"India is the second most sought-after manufacturing destination in the world," stated FM Nirmala Sitharaman, addressing the Upper House during the ongoing winter session of Parliament.

The FM had earlier also stated earlier in the day that there would be no "spectacular announcements" on the February 1, 2024 budget. She added that there would be a vote-on-account ahead of the general elections in 2024.