India's Q2 GDP Soars to 7.6%, Remains Fastest Growing Major Economy

New Delhi: Showing the resilience in the economy, India’s gross domestic product or GDP for the second quarter of the ongoing financial year accelerated to 7.6 per cent. In comparison, the GDP growth stood at 7.8 per cent in the first quarter of FY24 and 6.1 per cent in the last quarter of the previous financial year, the government data showed on Thursday.

However, India remained the fastest-growing major economy as compared to China as its GDP growth in the July-September quarter this year was 4.9 per cent. Reacting to the growth of the economy, Prime Minister Narendra Modi said that 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,” Modi said.

Commenting on the Q2 GDP numbers, chief economic advisor (CEA) V Anantha Nageswaran said that India continued to be an outlier and remained the fastest growing major economy in the September quarter as well. “We may be understanding the growth, but not overstating it. I think India’s external sector remains stable despite headwinds,” Nageswaran said.

The CEA further said that the government is focussing on capital expenditure or capex, which is leading to improve the quality of spending in the country. “However, increasing demand for capital goods is driving a surge in orders as well. Besides, The fiscal management also remains on track, while tax buoyancy of close to 2 underlines strong revenue performance in the current financial year,” he said, adding that bank credit has been witnessing double-digit growth since late 2022, while headline and core retail inflation drops further.

As per the National Statistical Office (NSO) data, the real GDP or GDP at Constant (2011-12) Prices in Q2 2023-24 is estimated to attain a level of Rs 41.74 lakh crore, as against Rs 38.78 lakh crore in Q2 2022-23, showing a growth of 7.6 percent as compared to 6.2 percent in Q2 2022-23. Besides, the nominal GDP or GDP at Current Prices in Q2 2023-24 is estimated at Rs 71.66 lakh crore, as against Rs 65.67 lakh crore in Q2 2022-23, showing a growth of 9.1 percent as compared to 17.2 percent in Q2 2022-23, the NSO data showed.

“The GDP at Constant (2011-12) Prices in April-September 2023-24 (H1 2023-24) is estimated at Rs 82.11 lakh crore as against Rs 76.22 lakh crore during the corresponding period of previous year, showing a growth of 7.7 percent in H1 2023-24 as against 9.5 percent in H1 2022-23. With good performance in almost all sectors, in the second quarter, manufacturing and construction sectors grew significantly among the key sectors,” it showed.

“The manufacturing sector grew 13.9 per cent Q2FY24 after seeing a contraction of 3.8 per cent in Q2FY23, while the construction sector grew 13.3 per cent in the same period, up from 5.7 per cent in Q2FY23. Besides, mining & quarrying grew 10 per cent in Q2FY24 against a contraction of 0.1 per cent in Q2FY23, while agriculture, livestock, forestry & fishing industry grows 1.2 per cent in Q2FY24, down from 2.5 per cent in Q2FY23,” the data showed.

Meanwhile, the output of eight key infrastructure sectors jumped 12.1 per cent in October 2023 against 0.7 per cent expansion in the year-ago period on account of a sharp uptick in production of coal, steel, cement and electricity, 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, the government data showed on Thursday.

However economists and analysts are upbeat over the economic scorecard in the country, saying that the year-on-year (YoY) growth in the core sector expectedly rebounded to double digits in October 2023. “ They are mostly aided by the low base owing to a higher number of holidays in the year ago month amid the earlier onset of the festive season in 2022 vis-à-vis 2023. As many as four of the eight core industries witnessed double-digit growth in October 2023, including electricity, coal, cement and steel,” said Aditi Nayar, chief economist of ICRA.

“The sharp upside surprise to the second-quarter GDP figures is a welcome sign, especially as it comes in the backdrop of a broad-based pickup across most non-agricultural sectors. We, however, expect the second-half growth to moderate. Having said that, the full year GDP numbers have got a big fillip after today’s figures,” said Upasna Bhardwaj, chief economist, Kotak Mahindra Bank.