INDIA’S GDP DATA: 2023-2024 Q3

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Context

• India's GDP growth rate exceeded expectations, reaching a six-quarter high of 8.4% in the third quarter (October-December) of 2023-24, according to data from the National Statistical Office (NSO).

ALL ABOUT NSO: https://www.iasgyan.in/daily-current-affairs/national-statistical-office-nso-data#:~:text=The%20Ministry%20has%20two%20wings,Sample%20Survey%20Office%20(NSSO).

Findings

• India's Gross Domestic Product (GDP) growth rate for the third quarter (October-December) of 2023-24 exceeded expectations, reaching a six-quarter high of 8.4%.
• This growth rate was significantly higher than the 6.5% estimate for Q3 by the Reserve Bank of India (RBI) and similar estimates by economists.

Sectoral Performance:

• Several sectors showed improvement, including manufacturing, mining, construction, trade, hotels, transport, communication, and services related to broadcasting.
• However, the agriculture sector recorded a contraction during Q3, leading to a divergence in growth rates between GDP and Gross Value Added (GVA).

Reasons Behind Surge:

• The strong growth in sectors like manufacturing and construction contributed to the overall GDP growth.
• Investments also rose, supporting the GDP growth rate during the quarter.

Revision of GDP Growth Rates:

• The National Statistical Office (NSO) revised the growth rates for previous financial years and the current fiscal quarters.
• The third quarter growth rate benefited from a favorable base effect resulting from downward revisions in the year-ago period.

GVA vs. GDP Divergence:

• There was a sharp rise in net taxes and a fall in subsidies, which widened the gap between GVA and GDP growth rates.
• The GVA growth rate was recorded 190 basis points lower than the GDP growth rate in Q3.

Future Growth Expectations:

• The focus is on achieving a broad-based improvement in consumption growth and private investments to sustain the GDP growth momentum.
• However, concerns remain regarding slow growth in profits and rising input costs, which could impact future growth prospects.
• Additionally, the GDP deflator growth is expected to pull down real GDP growth in FY25, posing a challenge for sustained economic growth.