GDP growth surpasses estimates at 7.8% in Q4; FY24 tops 8%

India is seen growing 8.2 percent in 2023-24 thanks to the manufacturing and mining sector. However, farm sector GVA is seen slowing down to 1.4 percent in FY24 against 4.7 percent in 2022-23.

India’s gross domestic product (GDP) growth surpassed all expectations and stood at 7.8 percent in the January-March quarter, though slower versus 8.4 percent in the third quarter. The full-year 2023-24 GDP growth has been revised upwards to 8.2 percent from the second advance estimate of 7.6 percent, data released by the Ministry of Statistics and Programme Implementation on May 31 showed.

A survey of economists by Moneycontrol estimated Q4 GDP growth to slow down to 6.5-6.7 percent from 8.4 percent in the three months ended December 31, 2023. The survey showed 2023-24 GDP at 7.7-7.8 percent percent.

Prime Minister Narendra Modi noted that Q4GDP growth “exemplifies that India continues to be the fastest growing major economy globally.”

Q4 GDP internals

Manufacturing sector GVA, though higher in FY24 on a year-on-year basis, witnessed a slowdown in the last quarter of the previous fiscal at 8.9 percent versus 11.5 percent in Q3.

Primary sector GVA remained flat on a quarter-on-quarter basis at 1.1 percent with farm sector showing a marginal rise of 0.6 percent from 0.4 percent in October-December, while mining and quarrying saw a sharp slowdown to 4.3 percent in Q4 versus 7.5 percent in Q3.

This means that unlike GDP, real GVA is seen slowing down to 6.3 percent in Q4 of FY24 from 6.8 percent in October-December.

The private final consumption expenditure (PFCE) grew at 4.0 percent on-year in the last quarter of the previous fiscal but remained flat versus Q3.

“Ind-Ra has been highlighting that the weakness in the consumption demand is due to its skewed nature towards goods and services largely consumed by the households belonging to the upper income bracket. Therefore, consumption demand continues to be narrowly based and its growth sustenance critically hinges on the recovery of goods and services consumed by the households belonging to the lower 50 percent of the income bracket,” said India Ratings’ Sunil K Sinha and Paras Jasrai.

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