In a remarkable turn of events, India’s economy experienced an impressive growth of 8.4% in the December quarter of FY24, surpassing expectations and solidifying 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, exceeding the median growth projection of 6.6% by a significant margin, as indicated by a survey of 17 economists.
The National Statistical Office (NSO) reported a growth figure higher than the 7.6% in Q2, later revised to 8.1%. Q1 GDP growth was reported at 7.8%. The unexpected surge prompted the NSO to revise the FY24 GDP growth estimate 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, fueled by robust double-digit growth in the manufacturing sector and increased investment. The manufacturing sector, constituting approximately 17% of the economy, recorded an impressive 11.6% year-on-year growth in Q3.
Gross Fixed Capital Formation (GFCF), an indicator of investment levels, displayed positive trends with a 32.4% annual increase in the December quarter. The government’s final consumption expenditure experienced a marginal decline, while household consumption saw a 4.4% decrease.
Although the agriculture sector’s growth faced a slight setback due to uneven monsoons, the overall economic performance remained robust, with the share of exports in GDP standing at 22.2% during the quarter.
Economic experts express optimism about India’s economic momentum, citing healthy manufacturing expansion, ongoing growth in the real estate sector, and increased infrastructure activities. However, challenges like affected crops, weak rural demand, and global headwinds pose potential hurdles. Despite these challenges, India’s GDP growth in Q3 FY24 defies expectations and underscores the country’s economic resilience.
This positive economic momentum contrasts with slowing growth and steep interest rates faced by major global economies. The IMF predicts India to outperform other major economies in FY24, providing a beacon of hope in the current volatile global economic landscape.
