What a scorcher: Can India sustain this torrid pace of growth?
Mint looks deeper into the third quarter performance and the prospects for the next few quarters. After strong growth in the first two quarters of 2023-24 (8.2% in Q1 and 8.1% in Q2), it was expected that the economic expansion will moderate to 6.5% levels in the third quarter. This was because manufacturing, mining and electricity sectors were showing signs of weakness, and an uneven monsoon was hurting agricultural output.
The government had also revised downwards the 2022-23 GDP growth from 7.2% to 7%. But the data released last week put the third quarter GDP growth at 8.4%. At the same time, economic expansion measured by gross value added (GVA) was just 6.5%, an unusually wide gap.
Manufacturing, driven by strong orders for plant and machinery, grew at a fast 11.6% in comparison to a negative growth of 4.8% in the same quarter of FY23. Investment, as measured by gross fixed capital formation, grew by 10.6%, indicating private investment in the economy is beginning to pick up. The mining sector too did well.
The performance of the services, construction and electricity generation sectors remained steady. However, government consumption and exports fell sharply even as private consumption continued to remain tepid. As expected, agriculture posted a negative growth.
The first advance estimate had put the 2023-24 GDP growth at 7.3%. The second advance estimate has now revised it to 7.6%. This comes on the back of a 7% growth in FY23.
India will continue to be the fastest growing large economy in the world in FY24. The International Monetary Fund says China is expected to grow by 4.6% and the US by 2.1%. Unlikely.
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