India’s Q1 GDP Data Out: Remaining one of the fast-growing major economies, India’s gross domestic product (GDP) grew at four-quarter high of 7.8 per cent y-o-y during the April-June 2023 quarter (Q1 FY24) as compared with the 6.1 per cent growth registered in the preceding quarter ended March 2023, according to the latest official data released on Thursday. India’s economy had grown 13.5 per cent in the corresponding quarter last year.
The 7.8 per cent GDP growth in Q1 FY24 is faster as compared with the US economic growth of 2.1 per cent in the April-June 2023 quarter (Q1), the UK’s GDP growth of 0.4 per cent and China’s growth of 6.3 per cent. During the Q1 FY24, Japan grew 6 per cent year-on-year, while Germany contracted 0.2 per cent.
“Real GDP or GDP at Constant (2011-12) Prices in Q1 2023-24 is estimated to attain a level of Rs 40.37 lakh crore, as against Rs 37.44 lakh crore in Q1 2022-23, showing a growth of 7.8 per cent as compared to 13.1 per cent in Q1 2022-23,” according to an official statement.
According to the latest data released by the National Statistical Office (NSO), India’s gross value added or GVA, which is GDP minus net product taxes and reflects growth in supply, also grew 7.8 per cent during April-June 2023.
According to the data, India’s agriculture sector recorded a 3.5 per cent growth, up from 2.4 per cent in the April-June quarter of 2022-23.
However, the growth in the manufacturing sector decelerated to 4.7 per cent in the first quarter of the current fiscal compared to 6.1 per cent in the year-ago period.
The growth in Gross Domestic Product (GDP) during the January-March quarter of 2022-23 was 6.1 per cent and 4.5 per cent in October-December.
Gross fixed capital formation (GFCF), which is an indicator of investment activity in the country, rose 7.95 per cent during the June 2022 quarter, lower as compared with 20 per cent a year ago. GFCF accounts for 34.7 per cent of the GDP.
Private final consumption expenditure (PFCE) and government final consumption expenditure (GFCE) grew 5.9 per cent and (-) 0.71 per cent respectively during Q1 FY24 over Q1 FY23.
Meanwhile, according to separate latest data, India’s fiscal deficit during April-July 2023 stood at Rs 6.06 lakh crore or 33.9 per cent of the full financial year target.
Aditi Nayar, chief economist and head (research and outreach) at ICRA, said, “Although a supportive base propelled India’s GDP growth to a four-quarter high of 7.8 per cent in Q1 FY2024, it is below our expectations of 8.5 per cent as well as the MPC’s projection of 8 per cent.”
He said the GDP growth is likely to moderate over the next few quarters, on the back of what is likely to be a below-normal monsoon, narrowing differentials with year-ago commodity prices, and a possible slowdown in the momentum of government capex as we approach parliamentary elections.
“For now, we are maintaining our FY2024 GDP growth estimate at 6 per cent, lower than the MPC’s projection of 6.5 per cent for the fiscal,” she said.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities, said, “The 1QFY24 GDP growth at 7.8 per cent was in line with expectations. As we expected, the services sector along with the construction sector pushed GDP growth in this quarter. Investment growth continued to outpace consumption growth.”
He said this trend is expected to continue over the next couple of quarters. GDP growth prints will be lower than the 1Q print for the rest of the year.
“Going forward, we need to watch for risks to the agriculture sector, sustenance of capex push from central and state governments, global demand conditions, and the lagged impact of interest rate hikes,” Rakshit said.