Indian economy expanded 7.6% in the September quarter, beating estimates

India’s GDP demonstrated a robust performance with its third-quarter growth reaching 7.6%, surpassing the Reserve Bank of India’s (RBI) forecast of 6.5%.

This led Barclays and Citigroup to adjust their fiscal year growth projections for the country to 6.7%.

The data, released on Thursday, underscored the nation’s resilience as the fastest-growing major economy, even against a backdrop of a global slowdown as well as subdued consumer spending in the country.

The economic surge is mainly attributed to strong manufacturing and construction sectors, bolstered by the government’s heavy investment in infrastructure and incentives for companies to establish operations domestically.

Investments in India showed significant strength, with gross fixed capital formation climbing by 11.04%.

Economists have praised the broad-based economic improvement, especially in non-agricultural sectors, even as the service sector experienced a deceleration, impacted by a decline in global financial services demand.

The agriculture sector faced particular challenges due to lower monsoons, which affected the summer crop harvest. According to the National Statistical Office (NSO) data, the agriculture sector GVA (Gross Value Added) growth decelerated to 1.2 per cent in the September 2023 quarter from 2.5 per cent a year ago.

The RBI is expected to remain hawkish on interest rates in light of inflation concerns.

India’s gross domestic product (GDP) expanded by 6.2 per cent in the July-September quarter of 2022-23, as China posted a 4.9 per cent growth in the same period, making India the fastest-growing major economy in the world.

Prime Minister Narendra Modi said the GDP growth figure displayed the resilience and strength of the Indian economy amid testing times globally.

‘The GDP growth numbers for Q2 display the resilience and strength of the Indian economy in the midst of such testing times globally. We are committed to ensuring fast-paced growth to create more opportunities, rapid eradication of poverty and improving ‘ease of living’ for our people,’ said PM Modi on X.

NSO data suggests the expansion in financial, real estate and professional services’ GVA was 6 per cent, down from 7.1 per cent in the year-ago quarter.

The GVA in the manufacturing sector showed a growth of 13.9 per cent in the second quarter of the current fiscal compared to a contraction of 3.8 per cent in the year-ago period.

As per the data, the output (GVA) in the ‘mining and quarrying’ accelerated to 10 per cent in the second quarter against a contraction of 0.1 per cent a year ago.

Electricity, gas, water supply and other utility services’ grew by 10.1 per cent from 6.1 per cent.

The construction sector recorded a growth of 13.3 per cent year-on-year in the second quarter compared to 5.7 per cent.

The growth in gross domestic product (GDP) during the April-June quarter of 2023-24 remained unchanged at 7.8 per cent.

‘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 per cent as compared to 6.2 per cent in Q2 2022-23,’ the NSO said in a statement.

Nominal GDP or GDP at current prices in Q2 2023-24 is estimated at INR 71.66 lakh crore against INR 65.67 lakh crore in Q2 2022-23, showing a growth of 9.1 per cent as compared to 17.2 per cent in Q2 2022-23, it added.

Meanwhile, the output of eight key infrastructure sectors jumped 12.1 per cent in October 2023 against 0.7 per cent expansion a year ago.

This could be attributed to an uptick of coal, steel, cement and electricity production, according to the official data.

The government’s fiscal deficit at the end of October touched 45 per cent of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Thursday.
The RBI is expected to keep interest rates unchanged at their upcoming policy meeting on December 8, reflecting confidence in the strong quarter numbers.