India’s GDP growth for the second quarter of the current financial year 2023-24 came in at a much better than expected number of 7.6%, much higher than 6.2% in the second quarter of the previous fiscal year. Most analysts expected the Q2 GDP growth data to moderate to around 6.8%. The 7.6% GDP growth is a slight moderation from the 7.8% GDP growth witnessed in the first quarter of FY24.
The Indian economy has also managed to retain its tag of being the fastest growing major economy in the world. India’s real GDP reached a level of Rs 41.74 lakh crore in Q2 of 2023-24 against Rs 38.78 lakh crore in the second quarter of 2022-23. The nominal GDP is estimated at Rs 71.66 lakh crore in Q2 FY24 against Rs 65.67 lakh crore in Q2 2022-23. This is an increase of 9.1% compared to 17.2% in Q2 2022-23.
India GDP data for Q2 FY24: Keys and takeaways
- India’s Q2 GDP data, while moderate from the first quarter, is well above analysts’ estimates of 6.8%. It is also more than a percentage point above the RBI estimates of 6.5%
- The manufacturing sector grew by a strong 13.9% against -3.8% YoY
- Mining and quarrying also saw robust growth of 10% against -0.1% YoY
- Agriculture, Livestock, Forestry and Fisheries growth slowed to 1.2% vs. 2.5 YoY
- Trade, Hotels, Transport, Communications and Broadcasting related services growth slowed to 4.3% vs. 15.6% YoY
- Electricity, Gas, Water Supply and Other Services grew by 10.1% against 6% YoY
- Construction also saw good growth of 13.3% against 5.7% YoY
Meanwhile, S&P Global Ratings recently revised India’s growth forecast for the current financial year, expecting an increase to 6.4% from 6% due to robust domestic momentum offsetting challenges such as high food inflation and weak exports. For the next fiscal year (2024-25), the agency cut growth estimates to 6.4%, anticipating a slowdown in the second half of the current fiscal year due to a higher base effect and sluggish global growth. S&P noted that emerging market economies like India, Indonesia, Malaysia and the Philippines are on track for robust growth due to solid domestic demand. While fixed investment in India rebounded considerably, the agency noted a transient spike in food inflation in the July-September quarter, having minimal impact on underlying inflationary dynamics. However, headline inflation remains above the Reserve Bank of India’s 4 percent target, indicating a continued lag in the exchange rate cycle.