India's GDP may end up growing by just 5.9 percent in January-March 2024 – the lowest in five quarters – shows data released by the National Statistical Office (NSO), under the statistics ministry, on February 29.
In its second advance estimate of GDP for 2023-24, the ministry pegged the current year's growth rate at 7.6 percent, 30 basis points higher than its first advance estimate of 7.3 percent. It also made upward revisions to the GDP growth rate for the first two quarters: from 7.8 percent to 8.2 percent for April-June 2023 and from 7.6 percent to 8.1 percent for July-September 2023.
Given that the growth in October-December 2023 came in at 8.4 percent, smashing all expectations, calculations show that the fourth-quarter growth rate must slump to 5.9 percent for the second advance estimate of 7.6 percent for the full-year to be met. And economists think this could actually happen.
"Going forward, we expect real GDP growth to ease towards 6 percent in Q4, which is in line with the CSO (Central Statistical Office) forecast, leading to 7.6 percent growth in 2023-24," said Nikhil Gupta, chief economist at Motilal Oswal Financial Services.
Gupta's forecast for January-March is an upgrade from 5.6 percent earlier.
The implied GDP for the final quarter of 2023-24 is calculated by subtracting the GDP for the first three quarters from the second advance estimate for 2023-24 as a whole. The percentage increase from the GDP for January-March 2023 will be the growth rate for the current quarter.
| Implied Q4 GDP (Rs lakh crore) | ||||
| FY24 GDP (2nd advance estimate) | Q1 | Q2 | Q3 | Implied Q4 GDP |
| 172.90 | 40.91 | 41.86 | 43.72 | 46.42 |
"Growth momentum is expected to moderate as companies' profit growth slows, as input cost pick-up," said Gaura Sen Gupta, India economist at IDFC First Bank.
"On the consumption front, rural demand is likely to get support from strong rabi output. However, urban demand could moderate as urban wage growth slows. Government capital expenditure which has been the key support for capex cycle, could slow in Q4. Indeed, central government capital expenditure in January is lower by 40.5 percent year-on-year in nominal terms."
Data released also on February 29 showed the Centre's capital expenditure in the first month of 2024 was just Rs 47,557 crore. In fact, ICRA's chief economist Aditi Nayar now expects the central government to miss its revised capex target of Rs 9.50 lakh crore for 2023-24 by at least Rs 50,000 crore.
Also Read: FY25 capex target set at Rs 11.11 lakh crore, but FY24 aim missed
On the other hand, Chief Economic Advisor V Anantha Nageswaran is not really bothered by what the statistic ministry's numbers imply for the fourth quarter, telling reporters on February 29 after the release of the GDP data that high-frequency indicators point to "continued good performance" in January-March.
"This is the sort of quarter-by-quarter break-down we have done in the past and we have shown you that our GDP numbers are not seasonally adjusted… We need to abstract ourselves from this quarter-by-quarter forecasts," Nageswaran said when asked about the slowdown in the fourth quarter implied by the latest numbers.
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