New Delhi: Surprisingly, the Indian economy grew by 8.4% in the December quarter, defying expectations that it would slow down. Manufacturing, power, and construction all demonstrated their strength. India continued to be the largest economy in the world with the fastest rate of growth during this process.
Compared to the 4.3% growth rate in Q3 of FY23, the Q3 growth figure is nearly twice as fast. A median of 6.6% was obtained from a Mint survey of 17 economists. Similar forecasts were made by others as well.
The statistics ministry’s Q3 figure, which was increased to 8.1% on Thursday, is likewise higher than the 7.6% published in Q2. GDP growth in Q1 was 7.8%, according to reports.
Due to the strong growth rate, the National Statistical Office (NSO) increased its estimate of GDP growth in FY24, moving it up from 7.3% in the initial advance prediction to 7.6% in the second revised estimate. The IMF’s forecast for FY24 is 6.7%, which is less than both the RBI’s and NSO’s estimates of 7% and 7%, respectively.
The director general of CII, Chandrajit Banerjee, expressed confidence that the Indian economy will “continue to grow at 7%+ growth rate over the medium term” and noted that “what is comforting to note is the robust expansion came despite the recurring spate of geopolitical flashpoints and was premised on a healthy double-digit expansion in manufacturing and investment.”
India has experienced strong growth, despite the fact that major global countries are experiencing decreasing growth and rising interest rates. According to forecasts by the International Monetary Fund (IMF), India’s GDP would surpass major economies such as China (4.6%), the US (2.1%), Japan (0.9%), France (1%), the UK (0.6%), and Germany (-0.5%) in FY24.
The manufacturing sector, which makes up roughly 17% of the economy, grew by 11.6% year over year in Q3, but that was only possible because Q3 of FY23 saw a negative 4.8% growth rate.
Uneven rainfall in some regions of the nation caused the agriculture sector’s growth to slow down in the December quarter of current fiscal year, from 5.2% in the same quarter the previous year to 0.8%. “Rural consumption demand will be impacted by agricultural GVA growth, as evidenced by the 3% increase in overall consumption in FY24. The economy’s demand for consumption may decline over an extended period of poor agricultural growth, according to India Ratings chief economist Devendra Kumar Pant, who also noted that a future recovery in rural demand will be crucial.
6.1% annual decrease in foodgrain production was projected by the ministry of agriculture and farmers’ welfare late on Thursday evening for the 2023–24 crop year (July–June). This amounts to 309 million tonnes of grain production.
An indication of the amount of investments made in the nation, gross fixed capital formation (GFCF) increased to 32.4% on an annual basis in the December quarter. However, it somewhat decreased from the 34.3% recorded in the prior quarter.
On an annual basis, the government’s final consumption spending decreased marginally to ₹3,41,625 crore in Q3 from 3,52,789 crore in the same period the previous year. In the December quarter, household consumption or private final consumption expenditure fell by 4.4%.
In comparison to the same quarter last year, when exports made up 23.3% of GDP, this quarter’s export share was 22.2%.
By increasing its own investments, the government is attempting to stimulate the economy’s capital investment cycle. From ₹5.70 trillion in FY23 to ₹7.21 trillion in April-January FY24—or 75.9% of the revised annual estimate—the government spent more on capital projects.