The World is Falling in Recession but India’s GDP Grows How? 8.4%– India’s economy surged by a better-than-expected 8.4 percent in the final quarter of 2023, marking the fastest pace in eighteen months. This growth strengthens Prime Minister Narendra Modi’s track record of delivering stellar growth rates ahead of general elections.
The growth rate for October-December surpassed the 7.6 percent recorded in the preceding three years, propelling the fiscal estimate for April 2023 to March 2024 to 7.6 percent, as per data released by the National Statistical Office (NSO) on Thursday.
The 2023-24 projection exceeds earlier estimates, with the IMF and World Bank forecasting 6.7 percent and 6.3 percent respectively.
The robust growth in the third quarter was fueled by a double-digit surge of 11.6 percent in the manufacturing sector, while services also witnessed a significant uptick. However, the agricultural sector experienced a modest contraction of 0.8 percent during the same period.
Private consumption growth remained sluggish at 3.6 percent, raising concerns among economists despite the high GDP growth.
Prime Minister Narendra Modi expressed confidence in sustaining rapid economic growth, aiming to improve the lives of 1.4 billion Indians and build a developed India.
India is poised to retain its position as the fastest-growing economy amidst global economic slowdown.
GVA growth in the employment-intensive trade, hotels, transport, communications, and broadcasting services sectors is expected to almost halve to 6.5% in 2023-24 from 12% in 2022-23. Mr. Nageswaran stressed that this comes on the back of very strong upticks in 2021-22 and 2022-23, so that this is more of a stabilisation rather than a dip.
Robust 8.4% GDP growth in Q3 2023-24 shows the strength of Indian economy and its potential. Our efforts will continue to bring fast economic growth which shall help 140 crore Indians lead a better life and create a Viksit Bharat!
— Narendra Modi (@narendramodi) February 29, 2024
Government initiatives such as increased capital expenditure and investments in defense and manufacturing sectors are expected to drive further economic growth.
Differential between Gross Value Added (GVA) and GDP growth in the third quarter, as well as discrepancies in GVA growth for the fiscal year, warrant further investigation.
Suman Chowdhury, Chief Economist & Head of Research at Acuite Ratings, suggests that the unexpectedly high momentum in the economy may lead to a prolonged period of tight monetary policy by the RBI.
The National Statistical Office (NSO) reported a GDP growth of 4.3 percent in the October-December 2022 quarter.
The manufacturing sector witnessed a significant turnaround, growing by 11.6 percent in the third quarter compared to a contraction of 4.8 percent in the previous year.
Mining and quarrying grew by 7.5 percent, up from 1.4 percent a year ago, while construction maintained a growth rate of 9.5 percent.
However, the agricultural sector witnessed a decline of 0.8 percent during the quarter.
Other sectors such as electricity, gas, water supply, and utility services, as well as financial, real estate, and professional services, also exhibited varying growth rates.
The NSO’s second advance estimate pegs the economic growth for the current fiscal year at 7.6 percent, up from the initial estimate of 7.3 percent.
Revisions in GDP growth for previous years have also been made, with the per capita income and expenditure estimates updated accordingly.
The NSO has revised GDP estimates for the first and second quarters of the fiscal year, indicating overall positive economic performance.
