Gujarat’s economy is estimated to grow at 10.5 percent during the current financial year 2023-24. This will be the slowest rate of growth clocked by the state since the Covid pandemic, documents tabled in the state legislature on Friday, showed.

As per the “Medium Term Fiscal Policy Statement’‘, at current prices, Gujarat’s Gross State Domestic Product (GSDP) is expected to grow at 10.5 per cent to ₹24.64 lakh crore (revised estimates). The growth rate in 2021-22 and 2022-23 was 19.3 percent and 15.7 per cent, respectively.

When asked if there is a slowdown in the growth rate of Gujarat’s GSDP, JP Gupta, Additional Chief Secretary, Finance Department, told businessline, “If you look at Gujarat’s GSDP growth for the last 10 years, it is around 12.8 per cent. This is more than the growth rate of the entire country.” For the next financial year, Gujarat’s GSDP is expected to touch ₹27.92 lakh crore which is an estimated growth of 13.3 per cent.

Rising Public Debt

The public debt of Gujarat as a percentage of GSDP has risen from 15.17 per cent in 2022-23 to 15.34 per cent in 2023-24 (as per revised estimates). As on March 31, 2024, the gross public debt of the state is estimated to be ₹3.77 lakh crore which works out to 15.34 per cent of GSDP. As per budget estimates for 2024-25, the public debt is expected to rise further to ₹4.26 lakh crore and cross ₹5 lakh crore by 2026-27. 

“The Market Loans are the most dominant component of public debt accounting for 83.63 per cent of the total public debt as on March 31, 2023. As per the financial year 2023- 24 (revised estimates), it is estimated that the State would borrow ₹51,000 crore in the financial year. In the case of open market borrowing, the State has been able to borrow at most competitive rates without taking recourse to underwriting. This has resulted in significant interest savings for the State as the market borrowings are made around a weighted average cost of 7.46 per cent in financial year 2023-24 (revised estimates),” stated the government.

While the Gujarat government has been successful in limiting the fiscal deficit for the financial year 2022-23 at ₹16,845 crore -- which was 0.76 percent of GSDP -- the fiscal deficit for the year 2023-24 is estimated to be ₹42,480 crore which will be 1.72 per cent of the GSDP.