Govt to relook FY24 growth forecast of 6.5% after blockbuster Q2 GDP data

India's GDP growth of 7.6 percent in July-September, while lower than the April-June number, was sharply higher than what economists had predicted.

The finance ministry will take a look at its GDP growth forecast of 6.5 percent for 2023-24 after the blockbuster data for July-September, Chief Economic Adviser V Anantha Nageswaran has said.

Speaking to reporters after the release of the data on November 30, the government's top economist said he didn't "want to say any number without working them out".

"We got this 7.6 percent number about an hour or so ago. So we need to work out the numbers and see what kind of upside it imparts to the overall estimate for the year. At the moment, all it means is that we are much more comfortable with 6.5 percent than before," Nageswaran said.

Data released on November 30 by the statistics ministry showed India's GDP growth rate came in at 7.6 percent in July-September, significantly higher than economists' expectations of 6.8 percent. Meanwhile, the Reserve Bank of India (RBI) had forecast a growth rate of 6.5 percent.

The government and the RBI's full-year GDP growth forecast is 6.5 percent.

"When we presented the Economic Survey, we said 6.5 percent, but the risks were tilted to the downside. And sometime in May-June, we did upgrade it by saying that risks were balanced. Now we have got two quarters of numbers. We will do our homework and tell you in the next Monthly Economic Review how we see things," Nageswaran added.

The finance ministry usually releases its Monthly Economic Review report in the third week of each month.

The stunning GDP growth number for the second quarter has surprised all economists, with some already revising their full-year growth forecasts.

"Q2 FY24 GDP print compels us to revise our FY24 growth forecast higher by 30 basis points to 6.5 percent," QuantEco Research's economists said.

Nageswaran, meanwhile, also suggested that there was a possibility of the statistics ministry underestimating India's growth.

"It is a theoretical possibility that when you have a tax buoyancy which is as high as 1.9 or close to 2, which is historically unprecedented, then it is quite possible that we are not measuring the economy's underlying momentum and activity and dynamism as we should be," the chief economic adviser said.

"Contrary to some opinions that the economy's growth numbers are being overstated… These are real numbers. These are cash flow statements put out by companies... It behooves us to consider the possibility that the economy could be actually growing far better than what we are actually measuring," he added.