GDP projected to a grow 7.6% in FY24, third year 7% growth in a row.
Propelled by strong growth in the construction and manufacturing growth in the October-December (Q3) of the current financial year (FY 2024), the Indian economy remained resilient, with the gross domestic product projecting a growth rate of 7.6 per cent in FY24 compared to growth rate of 7.0 per cent in 2022-23. The remarkable growth of 7.6 per cent in FY 2024, makes this the third consecutive year of growth of 7 per cent or above.
Double-digit growth rate of the construction sector at 10.7 per cent, followed by a good growth rate of manufacturing at 8.5 per cent have boosted the GDP growth in FY 2023-24.
On the back of double-digit growth in manufacturing sector at 11.6 per cent, followed by a good growth rate of construction sector at 9.5 per cent, the real GDP grew by 8.4 per cent in Q3 of FY 2023-24. The NSO, in its advance estimate said that the Gross Value Added (GVA) in the economy is estimated to rise 6.9 per cent this year, rising from a revised estimate of 6.7 per cent GVA growth in 2022-23. The NSO had earlier pegged last year’s GVA growth at 7 per cent.
The Gross Fixed Capital Formation continues to rise relative to GDP, reflecting a broad-based pick-up in investment. Investments emerged as the fastest growing component of GDP in Q3 FY2024, and displayed a mild sequential dip, contrary to the sharp slowdown seen in government capex. Private final consumption expenditure growth inched up but remained tepid at 3.5 per cent in Q3 FY2024, with rural demand perceived to be cautious after an unfavourable monsoon and urban demand assessed to be uneven as well.
The Q3 data on India’s growth threw up a divergent trend, according to Aditi Nayar, Chief Economist, ICRA, with the GVA growth moderating broadly on expected lines to 6.5 per cent and the GDP expanding by a much higher than anticipated 8.4 per cent. This wide gap followed from a surge in the growth of net indirect taxes to a six-quarter high 32 per cent in this quarter, which is unlikely to be sustainable. “In our view, it may be more appropriate to look at the trend in the GVA growth to understand the underlying momentum of economic activity,” said Nayar.
The nominal GDP or GDP at current prices in FY2023-24 is estimated to attain a level of ₹293.90 lakh crore, against ₹269.50 lakh crore in 2022-23, showing a growth rate of 9.1 per cent. The real GDP or GDP at constant (2011-12) prices in the year 2023-24 is estimated to have grown at ₹172.90 lakh crore against the first revised estimates (FRE) of GDP for the year 2022-23 of ₹160.71 lakh crore, the National Statistics Office said.
The performance in FY24 is backed by an impressive growth of 8.4 per cent in Q3 FY 2024 as against 4.3 per cent in Q3 of FY 2023. In the third quarter of FY24, the GDP at current prices is estimated at ₹75.49 lakh crore, as against ₹68.58 lakh crore in Q3 of 2022-23, showing a growth rate of 10.1 percent. The GDP figures show government expenditure contracted 3.2 per cent during the December quarter, whereas, the private consumption increased by 3.5 per cent during the quarter. According to the recent GDP data, exports are now predicted to increase 1.5 per cent in rupee terms from the previous year while imports is expected to grow at 10.9 per cent annual growth.
Amidst the sharp upside surprise in the headline GDP growth number, the contraction in the Government’s revised expenditure and capex, as well as the slide in the core sector growth in January 2024, offer some sobering trends, according to Nayar.