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India forecast annual growth of 7.3% in the fiscal year ending in March, the highest rate of any of the major global economies, providing a boost for Prime Minister Narendra Modi ahead of the national elections scheduled to be held before May.

"These are early projections for 2023/24," the National Statistical Office (NSO) said in a statement on Friday, adding improved data coverage, actual tax receipts and spending on state subsidies could affect subsequent revisions.

The first advance estimates of annual gross domestic product follow last month's increased forecast to 7% from the Reserve Bank of India (RBI), up from an earlier estimate of 6.5%.

Analysts said growth exceeding 7% for a third year in a row in the context of a global slowdown would help Modi to win a third term to rule Asia's third-largest economy.

"This growth comes at a time when global conditions remain weak and its credit goes to how the government is managing the economy," Rahul Bajoria, economist at Barclays Investment Bank, said.

S&P Global Ratings expects India will remain the fastest-growing major economy for the next three years, putting it on track to become the world's third-largest economy by 2030, overtaking Japan and Germany.

India's economy grew 7.2% in 2022/23 and 8.7% in 2021/22.

Finance Minister Nirmala Sitharaman will present an interim annual budget on Feb. 1 and is expected to increase spending on infrastructure, helped by rising tax receipts, while aiming to lower the fiscal deficit from 5.9% of GDP in the current fiscal year.

Government spending is estimated to rise by about 4% year-on-year in 2023/24 compared to a 0.1% increase in the previous fiscal year, while private investment would rise by 10.3%, lower than an 11.4% rise in the previous year, data showed.

Private consumption, which accounts for nearly 58% of GDP, was seen expanding by 4.4% year-on-year compared to 7.5% in the previous fiscal year.

EXPANDING MANUFACTURING

Modi has taken steps to attract global companies including Apple and Japanese companies, to set up factories in India, while increasing spending to build roads, ports and airports.

Manufacturing, which accounts for about 17% of GDP, is estimated to expand 6.5% year-on-year in 2023/24, compared to 1.3% a year ago, while construction output was seen growing by 10.7%, up from 10% in the previous year, data showed.

India posted faster-than-expected economic growth of 7.6% year-on-year in the September quarter, after growing 7.8% in the previous quarter, which prompted many private economists to upwardly revise their yearly estimates.

Many economists feel that India's growth was fuelled by sectors, including information technology and financial services that only create limited jobs and do not help the poor in rural areas.

Growth in farm output, which contributes about 15% of GDP and employs more than 40% of workforce, was seen slowing to 1.8% in the current fiscal year, from 4% a year ago.

Average per capita income in the South Asian nation with a population of over 1.4 billion, remains around $2,500, less than a quarter of China's.