India's Q4 FY24 GDP Growth Exceeds Expectations at 7.8%, Annual Growth Hits 8.2%

Q4 FY24 GDP Growth: India's Gross Domestic Product (GDP) for the 4th quarter of fiscal year 2023-24 grew at a strong rate of 7.8%. This exceeded various polls that had anticipated a slowdown to 6.7%. The Q4 FY24 GDP growth data, released at 5:30 PM on May 31st, highlights the economy's flexibility despite earlier predictions of a slowdown. 

FY24 GDP Growth: For the entire fiscal year 2023-24, India's real GDP growth provisionally stands at 8.2%. This figure show cases a significant improvement from earlier quarters and reflects the economy's strong performance over the past year. The growth rate for Q3 FY24 had previously reached an unexpected 8.6%, indicating a consistent upward trend. 

Reserve Bank of India's Outlook: According to the RBI the central bank of india, the Indian economy is expected to experience a expand by 7% in the current financial year FY25. The RBI's annual report highlights India as the world's fastest-growing major economy, currently the fifth largest, with expectations to become the third largest after the US and China in the coming years. 

Sector-wise Growth Analysis: The data released by the National Statistical Office (NSO) on May 31st revealed that the real gross value added (GVA) grew at a rate of 7.2% in 2023-24, up from 6.7% in 2022-23. This growth has moved the Indian economy to a $3.5 trillion valuation, setting the stage for achieving the $5 trillion target in the near future. The manufacturing sector particularly drove this growth, with a 9.9% increase compared to a negative 2.2% in FY23. 

Economic Experts' Insights: Former Chief Economic Advisor (CEA) Prof. Krishnamurthy V Subramanian noted a significant improvement in productivity growth post-2014, from 1.3% pre-2014 to 2.7% post-2014. He emphasized that the growth rate of 7.2% in GVA and 8.2% in GDP is credible, attributing the higher growth in net taxes to the robust economic performance over the last decade. 

Suman Chowdhury's Analysis: Suman Chowdhury, Chief Economist & Head of Research at Acuité Ratings, highlighted the surprising GDP growth figures, noting the strong performance in the manufacturing sector and the slow growth in agriculture due to the El Nino phenomenon. He pointed out that the higher-than-expected GDP growth led to a downward revision in the fiscal deficit to 5.6% for FY24, signalling positive fiscal consolidation. 

Pre-Election Economic Data: The release of the GDP data comes just few days before the high-stakes Lok Sabha election results of 2024, scheduled for June 4th. The economic performance in FY24, marked by an 8.2% growth, provides a favorable backdrop for the incumbent government. 

Challenges and Future Outlook: Despite the positive growth figures, some economists believe the economy needs to grow faster for the benefits to reach the unemployed and poorer sections of society. The relative weakness in private consumption expenditure, estimated at 4%, and the impact of a relatively weak rural economy in the previous year have been noted as areas needing attention. However, the overall momentum in the economy remains strong, driven by government investments and higher tax collections.