India’s Economy Surges with 8.4% Growth in Q3 FY24

In a surprising turn, India’s economy witnessed robust growth of 8.4% in the December quarter, exceeding expectations and maintaining its position as the world’s fastest-growing major economy. 

This Q3 growth rate is nearly double the 4.3% recorded in the same period of the previous fiscal year. A survey of 17 economists had projected a median growth of 6.6%, making the actual figure a pleasant surprise.

The growth figure reported by the National Statistical Office (NSO) is higher than the 7.6% reported in Q2, which was later revised to 8.1%. In Q1, the GDP growth was reported to be 7.8%. The unexpected high growth also prompted a revision in the estimate for FY24 GDP growth by the NSO, from 7.3% in the first advance forecast to 7.6% in the second revised estimate.

Despite global economic uncertainties and geopolitical tensions, India’s economy showcased resilience. The significant expansion was driven by a robust double-digit growth in the manufacturing sector and increased investment. The manufacturing sector, accounting for approximately 17% of the economy, recorded an impressive 11.6% year-on-year growth in Q3.

Gross Fixed Capital Formation (GFCF), an indicator of the level of investments, showed a pick-up at 32.4% on an annual basis in the December quarter. Although slightly lower than the 34.3% reported in the previous quarter, it indicated positive investment trends.

The government’s final consumption expenditure experienced a marginal decline on an annual basis, standing at ₹3,41,625 crore during Q3. Household consumption or private final consumption expenditure saw a 4.4% decline in the same period.

While the agriculture sector’s growth receded by 0.8% due to uneven monsoons in parts of the country, the overall economic performance remained robust. The share of exports in GDP stood at 22.2% during the quarter.

The unexpected growth rate has led to a revision in the estimate for FY24 GDP growth by the NSO. The Reserve Bank of India (RBI) has estimated FY24 GDP growth at 7%, while the International Monetary Fund (IMF) forecast is even more conservative at 6.7%.

Economists and industry experts have expressed optimism about India’s economic momentum, citing healthy manufacturing expansion, ongoing growth in the real estate sector, and increased infrastructure activities. However, some anticipate a moderation in growth due to challenges such as affected kharif crops, weak rural demand, and global headwinds. Despite the potential headwinds, India’s GDP growth in Q3 FY24 has defied expectations and showcased the country’s economic resilience.

This positive economic momentum comes at a time when major global economies are facing slowing growth and steep interest rates. 

The IMF predicts that India will outperform other major economies like China, the US, Japan, France, the UK, and Germany in FY24. India’s GDP growth figures indicate strong economic momentum, providing a ray of optimism in the current volatile global economic landscape.