The Indian economy showed robust growth in the first three quarters of the 2023-24 fiscal year, with GDP expanding by 8.2% in the June quarter, 8.1% in the September quarter, and 8.4% in the December quarter. India Ratings and Research (Ind-RA) expects the GDP growth rate to be 6.7% for the March quarter and around 6.9-7% for the entire fiscal year, according to their principal economist, Sunil Kumar Sinha. The official GDP numbers for Q4 and provisional estimates for FY24 will be released on May 31.
Quarterly Performance
- June Quarter: GDP growth at 8.2%
- September Quarter: GDP growth at 8.1%
- December Quarter: GDP growth at 8.4%
Factors Influencing Growth
The growth rates in the first two quarters benefited from a low base effect. The surprising 8.4% growth in the third quarter was significantly influenced by higher tax collections, creating a notable wedge between GDP and Gross Value Added (GVA). In Q3, while GVA was at 6.5%, GDP reached 8.4% due to this tax collection boost. This phenomenon is not expected to be repeated in Q4, which is projected to grow by 6.7%.
Reserve Bank and Fiscal Projections
The Reserve Bank of India projected a GDP growth rate of 7% for 2023-24 in its April monetary policy review. Sinha expects the GDP to expand by 7.1% in the current fiscal year, continuing the momentum observed in the first half.
Sectoral Contributions and Future Outlook
- Services Sector: Led by construction and electricity, expected to maintain momentum.
- Lagging Sectors: Mining and industrial output.
- Rural Demand: Predicted above-normal monsoon may revive rural demand, supporting broader consumption.
Ministry and Economic Review
The Finance Ministry highlighted India’s resilient growth, robust economic indicators, price stability, and steady external sector performance. Despite global uncertainties, India remains the fastest-growing major economy with a positive growth outlook supported by both international organizations and the RBI.
