India's GDP Surges to 8.4% in Q3
In a noteworthy development, India's Gross Domestic Product (GDP) surged to a six-quarter high of 8.4% in the third quarter (Q3) of the fiscal year 2023-24, as per data released by the National Statistical Office (NSO). This substantial growth has raised the estimate for the entire fiscal year to 7.6%, surpassing earlier projections of 7.3%. The remarkable expansion in GDP underscores the resilience and potential of the Indian economy, eliciting positive responses from key stakeholders.
The growth trajectory was propelled by stellar performances across various sectors. Manufacturing, mining, and financial services witnessed growth rates exceeding 8%, with manufacturing leading the pack at 11.6% growth in Q3. Conversely, agricultural growth remained subdued at 0.7%, contributing marginally to the overall economic landscape.
Private final consumption expenditure saw a modest rise of 3.5% year-on-year, while government final consumption expenditure experienced a slight decrease of 3.2%. Gross fixed capital formation, indicating investment activities, recorded a significant growth of 10.6% during the third quarter.
Prime Minister Narendra Modi hailed the robust GDP growth, emphasising its significance in showcasing India's economic strength and potential. He remarked, "Robust 8.4% GDP growth in Q3 2023-24 shows the strength of Indian economy and its potential. Our efforts will continue to bring fast economic growth which shall help 140 crore Indians lead a better life and create a Viksit Bharat."
Chief Economic Advisor V Anantha Nageswaran expressed optimism about the economy's momentum, foreseeing continued growth in the fourth quarter. He highlighted the ongoing structural transformation, both in physical and digital infrastructure, as well as the inclusive agenda aimed at enhancing the purchasing power of Indian households.
D K Srivastava, Chief Policy Advisor at EY India, highlighted the dominance of non-agricultural growth and substantial investment growth in driving GDP expansion. However, he noted a slowdown in consumption expenditure growth, which raised concerns about its impact on overall economic performance.
Economists raised concerns regarding the divergence between GDP and Gross Value Added (GVA) growth rates, primarily attributed to a sharp rise in net taxes. The discrepancy underscores the importance of analysing both indicators comprehensively to assess the true health of the economy.
Looking ahead, economists stressed the importance of fostering broad-based improvement in consumption growth and private investments. While the upward revisions in GDP data for FY24 signal optimism, they also pose potential downside risks to future forecasts. Hence, monitoring consumption patterns and investment trends will be crucial in sustaining the economic momentum in the coming quarters.
India's robust GDP growth in Q3 2023-24 reflects the resilience and potential of its economy. As the nation continues on its path of economic development, concerted efforts towards enhancing consumption, fostering investments, and addressing structural challenges will be imperative to ensure sustained and inclusive growth in the years ahead. The latest GDP figures provide a positive outlook for India's economic trajectory and underscore the need for strategic measures to capitalise on this momentum.
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