India's Q3 GDP Surges 8.4 Percent; FY24 Growth Projected at 7.6 Percent
According to government data, India's Gross Domestic Product (GDP) expanded by 8.4% year-on-year in the October-December quarter of the current fiscal year, significantly surpassing the Reserve Bank of India (RBI) monetary policy committee's projection of 6.5% for Q3 FY24. The robust GDP growth was primarily fueled by a double-digit surge in the manufacturing sector, which recorded an 11.6% increase, followed by a 9.5% growth in the construction sector, as stated by the NSO.
Meanwhile, the National Statistics Organisation (NSO) has adjusted the GDP growth for Q2 FY24 to 8.1%, up from the previous estimate of 7.6%, and revised the first-quarter growth upward to 8.2% from 7.8%. Consequently, the annual GDP growth estimate has been revised upward to 7.6% from the earlier projection of 7.3%. Despite predictions from economists and financial institutions of a slowdown in economic growth to between 6% and 6.8% in Q3 FY24 due to factors such as sluggish expenditure, muted industrial growth, and erratic monsoon, the actual GDP growth surpassed expectations. SBI Research had anticipated a GDP growth rate of 6.8%, while ICRA had estimated a moderation of 6% in the December quarter.
In contrast, additional economic data released by the Ministry of Commerce and Industry indicated that the growth of eight crucial infrastructure sectors decelerated to a 15-month low of 3.6% in January. This decline was primarily influenced by a contraction in fertilizer and refinery production. The Composite Index of Eight Core Industries (ICI) serves as a gauge for both combined and individual performance across eight core sectors: cement, coal, crude oil, electricity, fertilizers, natural gas, refinery products, and steel. In December 2023, the ICI had expanded by 4.9%, while in January 2023, it had surged by 9.7%. These eight core industries collectively represent 40.27% of the weight of items incorporated in the index of industrial production (IIP).
