India's Q3 Economic Surge: Construction And Manufacturing Sectors Propel 8.4% Growth
Chief Economic Advisor V Anantha Nageswaran acknowledged the robust GDP numbers, highlighting the ongoing structural transformation within the economy.
In the third quarter of the fiscal year 2023-24, India experienced an unexpected surge in GDP, expanding by 8.4% from October to December. This growth, reported by the Statistics Ministry on February 29, defied earlier expectations of a contraction fueled by factors such as minimal government spending, sluggish industrial output, and unpredictable monsoon patterns. Despite these concerns, the construction and manufacturing sectors emerged as strong pillars, propelling the economy beyond projections.
Prior estimates had suggested a growth rate of 6.64% for Q3 FY24, significantly lower than the actual figure. Despite the robust GDP growth, concerns lingered over subdued private consumption, which saw a modest 3.6% increase. Prime Minister Modi expressed optimism about sustaining rapid economic growth, reiterating the government's commitment to enhancing the lives of India's citizens.
Chief Economic Advisor V Anantha Nageswaran acknowledged the robust GDP numbers, highlighting the ongoing structural transformation within the economy. However, he also cautioned about potential risks posed by external factors.
The key highlights from the GDP data include:
India's GDP surged by 8.4% in Q3 FY24, surpassing market estimates and RBI projections. The second advance estimate revised India's full-year GDP growth rate to 7.6% from 7.3%, indicating an upward adjustment despite challenges in consumer spending and government expenditure. Additionally, the NSO revised GDP growth for 2022-23 to 7%. Driving GDP growth were the manufacturing and construction sectors, experiencing double-digit expansion in manufacturing (11.6%) and solid growth in construction (9.5%). The agriculture sector contracted by 0.8% in Q3 FY24, primarily due to adverse weather conditions, particularly a poor monsoon and El Niño impact. While private consumption increased by 3.5%, government consumption contracted by 3.2%, indicating a mixed picture in domestic demand. Both exports and imports as a share of GDP saw marginal declines during the December quarter. Notably, imports experienced a more significant decrease compared to exports. Gross fixed capital formation (GFCF) saw a slight decline but picked up pace at 32.4% on an annual basis in Q3 FY24, signaling ongoing investment activities.
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Updates on GDP data highlighted a 3.2% contraction in government expenditure and predicted increases of 1.5% in exports in rupee terms and 10.9% in imports on an annual basis.
Overall, India's Q3 GDP data for FY24 underscored resilience and growth momentum, driven by key sectors despite challenges in agriculture and government spending.
