India's gross domestic product (GDP) growth surpassed all expectations and stood at 7.8 percent in the January-March quarter, though slower versus 8.4 percent in the third quarter. The full-year 2023-24 GDP growth has been revised upwards to 8.2 percent from the second advance estimate of 7.6 percent, data released by the Ministry of Statistics and Programme Implementation on May 31 showed.
A survey of economists by Moneycontrol estimated Q4 GDP growth to slow down to 6.5-6.7 percent from 8.4 percent in the three months ended December 31, 2023. The survey showed 2023-24 GDP at 7.7-7.8 percent percent.
Prime Minister Narendra Modi noted that Q4GDP growth "exemplifies that India continues to be the fastest growing major economy globally."
The blowout GDP data will be roundly cheered by India's policymakers, with the government's chief economic adviser V Anantha Nageswaran earlier this month saying that there was a high possibility of India’s economic growth touching 8 percent in in FY24.
It also comes on the same day as Moody's Ratings raised India growth forecast to 6.8 percent in the current fiscal from 6.5 percent earlier citing strong, economic expansion and post-election policy continuity.
Real Gross Value Added (GVA) has grown by 7.2 percent in FY24 thanks to the manufacturing sector, whose GVA rose by 9.9 percent in 2023-24 over a contraction of 2.2 percent in 2022-23 as well as due to the mining and quarrying sector that grew 7.1 percent in the previous fiscal over 1.9 percent in FY23.
However, farm sector growth is seen slowing down to 1.4 percent in FY24 against 4.7 percent in 2022-23. And, the GVA for the tertiary sector is seen lower at 7.6 percent in 2023-24 versus 10.0 percent in FY23 with trade, hotel, and transport related services estimated to nearly halve on-year at 6.4 percent in the previous fiscal.
Real GVA has been estimated to grow by 6.3 percent in Q4 of 2023-24, while nominal GDP for the last quarter of the previous fiscal is seen at 9.9 percent.
For the full-fiscal year of FY24, nominal GDP is seen at 9.6 percent, missing the Budget estimate of 10.5 percent.
"The 8.2 percent growth estimate for the FY24 is significant as it is above the psychological mark of 8 percent. The GDP numbers have been buoyed by a strong print in manufacturing supported by a low base given the negative growth printed in previous year. Mining and Quarrying has also helped the higher print. However, all other sectors have printed a decline over previous year and the low prints in agriculture and services are areas of concern," according to Ranen Banerjee, Partner and Leader Economic Advisory, PwC India.
Commenting on the robust GDP growth in FY24, Finance Minister Nirmala Sitharaman said that India’s growth momentum will continue in the third term of PM Modi.
In a post on X (formerly Twitter), Sitharaman said, "Today's GDP data showcases robust economic growth with a growth rate of 8.2% for FY 2023-24 and 7.8% for Q4 of FY 2023-24. This remarkable GDP growth rate is the highest among the major economies of the world. It is worthwhile to note that the Manufacturing sector witnessed a significant growth of 9.9% in 2023-24, highlighting the success of the Modi government's efforts for the sector."
Q4 GDP internals
Manufacturing sector GVA, though higher in FY24 on a year-on-year basis, witnessed a slowdown in the last quarter of the previous fiscal at 8.9 percent versus 11.5 percent in Q3.
Primary sector GVA remained flat on a quarter-on-quarter basis at 1.1 percent with farm sector showing a marginal rise of 0.6 percent from 0.4 percent in October-December, while mining and quarrying saw a sharp slowdown to 4.3 percent in Q4 versus 7.5 percent in Q3.
This means that unlike GDP, real GVA is seen slowing down to 6.3 percent in Q4 of FY24 from 6.8 percent in October-December.
The private final consumption expenditure (PFCE) grew at 4.0 percent on-year in the last quarter of the previous fiscal but remained flat versus Q3.
"Ind-Ra has been highlighting that the weakness in the consumption demand is due to its skewed nature towards goods and services largely consumed by the households belonging to the upper income bracket. Therefore, consumption demand continues to be narrowly based and its growth sustenance critically hinges on the recovery of goods and services consumed by the households belonging to the lower 50 percent of the income bracket," said India Ratings' Sunil K Sinha and Paras Jasrai.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
