The GDP growth in the September quarter rose sharply above D-Street estimates along with growth projections by the central bank. The RBI had maintained real GDP growth for 2023-24 at 6.5 per cent with Q2 at 6.5 per cent.
The Indian economy grew 7.6 per cent during the July-September quarter of the current financial year 2023-24 (Q2FY24), remaining the fastest-growing major economy in the world, according to gross domestic product (GDP) data released by the statistic ministry on Thursday, November 30. The rise in GDP growth was supported by government spending and robust performance in manufacturing, mining, and construction sectors.
‘’The real GDP or GDP at constant (2011-12) prices in Q2 2023-24 is estimated to attain a level of ₹41.74 lakh crore, as against ₹38.78 lakh crore in Q2 2022-23, showing a growth of 7.6 per cent, compared to 6.2 per cent in Q2 2022-23”, data from Ministry of Statistics and Programme Implementation showed on Thursday, November 30.
Prime Minister Narendra Modi said on Thursday that the GDP growth figure for the second quarter of this fiscal displayed the resilience and strength of the Indian economy amid testing times globally.
PM Modi said on X, “The GDP growth numbers for Q2 display the resilience and strength of the Indian economy in the midst of such testing times globally. We are committed to ensuring fast-paced growth to create more opportunities, rapid eradication of poverty and improving ‘ease of living’ for our people.”
India Q2 FY24 GDP Growth: 5 Key Takeaways
-India’s Q2 Nominal GDP print
Nominal GDP or GDP at current prices in Q2 2023-24 is estimated at ₹71.66 lakh crore against ₹65.67 lakh crore in Q2 2022-23, showing a growth of 9.1 per cent as compared to 17.2 per cent in Q2 2022-23. The pace of growth was slightly slower than the 7.8 per cent expansion in the previous quarter, helped by the comparison with a lower base the previous year.
-Q2 GDP growth sharply above RBI estimates
The GDP growth in September quarter rose sharply above D-Street estimates along with growth projections by the Reserve Bank of India (RBI). The RBI had maintained real GDP growth for 2023-24 at 6.5 per cent with Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent. At its last monetary policy meeting, the central bank showed utmost concern on the rising inflation and its attached potential risk to the growth outlook.
–Manufacturing, construction sectors support GDP growth
The manufacturing sector, which for the past decade has accounted for just 17 per cent of the economy, expanded 13.9 per cent year-on-year in the September quarter, compared to a contraction of 3.8 per cent in the year-ago period. The mining sector accelerated to 10 per cent, against a contraction of 0.1 per cent a year ago., while construction grew 13.3 per cent on year.
-Govt spending up 12%, Private consumption missed estimates
Government spending rose 12.4 per cent year-on-year in September quarter compared to 0.7 per cent contraction in the previous quarter, but private consumption growth surprisingly slowed to 3.1 per cent year-on-year from 6 per cent. The growth in capital formation, an indicator of investment, picked up pace to 11 per cent year-on-year from 8 per cent in the previous three months.
-India to comfortably grow at 6.5% in FY24: CEA Nageswaran
On India’s Q2 GDP print, Chief Economic Advisor (CEA) V Anantha Nageswaran said, ‘’Based on current trends, it is possible that India may be underestimating its GDP growth and not overestimating it. We retain the FY24 GDP growth forecast of 6.5 per cent, but we will rework the numbers to see if the July-September growth data adds an upside to the forecast.”
Economists expect RBI to continue hawkish stance
Economists said that with the Q2 GDP growth rate coming in beyond expectations, the RBI may opt for a hawkish stance in its coming monetary policy committee (MPC) announcement on December 8.
Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram said, “This could be the start of some early signs that there is a rebalancing from services to goods in the economy. The GDP print for the second quarter does pose an upside bias for our full-year forecast of 6.5%.”
“We expect the Reserve Bank of India to remain hawkish at the upcoming policy as growth continues to show strength while inflation risks linger on,” she added.