“Real GDP or GDP at Constant (2011-12) Prices in Q2 2023-24 is estimated to attain a level of ₹41.74 lakh crore, as against ₹38.78 lakh crore in Q2 2022-23, showing a growth of 7.6 percent as compared to 6.2 percent in Q2 2022-23,” the release stated.
The Reserve Bank of India (RBI) rate-setting panel at its October meeting had pegged the growth estimate at 6.5%.
The agriculture, livestock, forestry & fishing industry recorded a growth of 1.2% in Q2FY24, down from 2.5% in Q2FY23.
Meanwhile, the mining & quarrying grew 10% in Q2FY24 against contraction of 0.1% in Q2FY23. The manufacturing sector grew 13.9% after seeing a contraction of 3.8% in Q2FY23.
Catch all GDP live updates hereConsumer demand, a pivotal contributor constituting about 60% of GDP growth, grew 3.13%, as per the official data released. The consumption remains robust, primarily propelled by urban residents. Despite inflationary pressures from an erratic monsoon, demand from India’s massive population of over 1.4 billion people remains steadfast.The government’s final consumption expenditure grew 12.4%. Meanwhile, the exports witnessed a grow of 4.32% on an annual basis in Q2 FY24.
“The sharp upside surprise to the second-quarter GDP figures is a welcome sign, specially as it comes in the backdrop of a broad-based pickup across most non-agricultural sectors. We, however, expect the second-half growth to moderate. Having said that, the full year GDP numbers have got a big fillip after today’s figures,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.
Similarly, Anand Rathi’s Chief Economist & Executive Director, Sujan Hajra, called the numbers a surprise. He said, “India’s GDP growth for the quarter ending September 2023 has exceeded both our and consensus expectations. On the supply side, industrial activity has been the biggest surprise, while on the demand side, investment and government final consumption have surprised pleasantly. At the same time, the supply side services sector and demand side private final consumption performed worse than predicted. Agriculture was likewise a let-down.”
He further added, “While we expect growth to moderate in the second half of the current fiscal year, we now estimate full-year growth to be at least 20 basis points better than our previous forecast of 6.2%. Rapidly falling inflation combined with faster-than-expected growth is good news for financial markets, notably equity markets. India remains the world’s fastest growing major economy.”
What analysts had expected
Barclays’ Rahul Bajoria notes, “Headline growth likely remained resilient…with utilities, services, and construction showing robust growth. Domestic demand remains the key economic driver of activity, as external demand continues to remain weak.”
The contrast between rural and urban demand is evident, with rural demand experiencing a temporary setback in the July-September quarter due to increased prices for everyday items. Economists, however, anticipate this weakness to be short-lived, with 69% predicting a narrowing gap between rural and urban consumption in the next two-to-three years.
India’s economic landscape has remained resilient, propelled by strong domestic demand and government expenditure, positioning the country as an exceptional performer among major economies despite global challenges, according to economists.
Despite a slowdown in services growth in the second quarter, experts suggest that robust manufacturing and construction activities likely contributed to the positive growth.
ICRA had suggested that India’s GDP growth likely moderated to 7% in Q2, considering a normalizing base and erratic monsoon. The firm anticipates a slightly lower GDP growth of 6.0% for FY2024, citing various factors impacting the economy.
The optimistic outlook for the second quarter was fueled in part by a surge in government capital expenditure, reaching 4.91 trillion Indian rupees ($58.98 billion) in the first half of the fiscal year, surpassing the previous year’s 3.43 trillion rupees.
India’s ongoing economic momentum received acclaim amidst a globally uncertain environment characterized by risks related to geopolitical conflicts, volatile energy prices, and concerns about a potential recession.
