India Q3 GDP Surges to 8.4%, Outshining : India’s economy has bounced back strongly from the pandemic-induced slump, posting a robust 8.4% growth in the third quarter of 2023-24. This is the highest quarterly growth rate since the first quarter of 2018-19, and well above the consensus estimate of 6.6%. India has also outperformed its major global peers, such as China, the US, and the EU, in terms of GDP growth in the same period. What are the factors behind this impressive performance, and what are the implications for the future? In this blog post, we will explore these questions and more.
India Q3 GDP Surges to 8.4%, Outshining
The Drivers of India’s Q3 GDP Growth
According to the data released by the Ministry of Statistics and Programme Implementation (MoSPI) on February 29, 2024, India’s Q3 GDP growth was driven by a broad-based recovery across various sectors and segments of the economy. Some of the key contributors were:
- Manufacturing: The manufacturing sector grew by a whopping 13.5% year-on-year in Q3, compared to a contraction of 1.5% in the same quarter last year. This reflects the revival of industrial activity and demand, as well as the benefits of various reforms and incentives undertaken by the government to boost the sector’s competitiveness and productivity. The manufacturing sector also accounted for the largest share of the gross value added (GVA) in Q3, at 18.4%.
- Construction: The construction sector also witnessed a strong growth of 12.5% year-on-year in Q3, compared to a decline of 2.5% in the same quarter last year. This indicates the improvement in infrastructure spending and real estate activity, as well as the easing of supply chain disruptions and labor shortages. The construction sector contributed 8.9% of the GVA in Q3.
- Agriculture: The agriculture sector maintained its resilience and grew by 4.5% year-on-year in Q3, compared to a growth of 3.5% in the same quarter last year. This was supported by a favorable monsoon season, higher crop production, and increased rural demand. The agriculture sector accounted for 14.6% of the GVA in Q3.
- Services: The services sector, which was the hardest hit by the pandemic, also registered a healthy growth of 7.4% year-on-year in Q3, compared to a contraction of 6.4% in the same quarter last year. This was led by the recovery in trade, hotels, transport, communication, and financial services, as well as the expansion of public administration, defense, and social services. The services sector contributed 53.3% of the GVA in Q3.
- Consumption: The private final consumption expenditure (PFCE), which measures the spending by households on goods and services, grew by 8.9% year-on-year in Q3, compared to a contraction of 2.4% in the same quarter last year. This reflects the improvement in consumer confidence, income, and savings, as well as the pent-up demand and festive season spending. The PFCE accounted for 56.5% of the GDP in Q3.
- Investment: The gross fixed capital formation (GFCF), which measures the spending by firms and governments on fixed assets such as machinery, equipment, and buildings, grew by 11.5% year-on-year in Q3, compared to a growth of 2.6% in the same quarter last year. This indicates the revival of investment activity and sentiment, as well as the availability of credit and liquidity. The GFCF accounted for 32.2% of the GDP in Q3.
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The Conclusion
India’s Q3 GDP growth of 8.4% is a remarkable achievement, and it shows the resilience and potential of the Indian economy. It also reflects the positive effects of the vaccination drive, the policy support, and the structural reforms that have been implemented by the government. However, there are still some challenges and risks that need to be addressed, such as the rising inflation, the fiscal deficit, the new variants of the coronavirus, and the global uncertainties. Therefore, it is important to maintain the momentum and the confidence, and to continue to pursue the path of sustainable and inclusive growth.