India’s economy grew by 7.8% year-on-year in the January-March quarter, surpassing forecasts due to robust performance in the manufacturing sector. This growth momentum is expected to continue throughout the year, according to economists.
Quarterly Performance and Forecast
In the first quarter of 2024, which is also the fourth quarter of the 2023/24 fiscal year, India’s GDP growth rate was 7.8%. This was lower than the revised 8.6% growth in the previous quarter but exceeded the 6.7% predicted by economists in a Reuters poll.
Expert Commentary
Madhavi Arora, Lead Economist, Emkay Global, Mumbai: “With higher overall growth in FY24, the base for FY25 will be elevated. The GVA growth, being less volatile, suggests the significant GDP-GVA gap seen in FY24 is likely to normalize by FY25.”
Radhika Rao, Senior Economist, DBS Bank, Singapore: “FY24 GDP growth slightly surpassed our expectations, affirming the economy ended the year strongly, driven by faster investment growth compared to consumption.”
Madan Sabnavis, Chief Economist, Bank of Baroda, Mumbai: “The 19.1% growth in net taxes, resulting from higher tax collections and lower subsidy payouts, significantly boosted GDP growth. We anticipate FY25 GDP growth to be around 7.3-7.4% due to the base effect.”
Aditi Nayar, Chief Economist, Head of Research and Outreach, ICRA, Gurugram: “Transient factors are likely to dampen growth in the first half of FY25, leading to a deceleration in GDP growth from the 8.2% recorded in FY24.”
Sachchidanand Shukla, Group Chief Economist, Larsen & Toubro, Mumbai: “The ongoing narrative includes sustained investment growth, subdued consumption, and stable government expenditure.”
Sakshi Gupta, Principal Economist, HDFC Bank, Gurugram: “The GDP growth surprised once again, with the GDP-GVA gap remaining high due to increased net tax growth. Manufacturing and construction sectors continued their strong performance, and consumption growth edged up slightly from the previous quarter.”
Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers, Mumbai: “We anticipate a meaningful increase in private consumption and a slight slowdown in investment growth. With strong growth and decreasing inflation, India’s economy is well-positioned to remain the fastest-growing major economy globally. These growth figures may challenge the Reserve Bank of India’s monetary policy, but with lower inflation and ongoing fiscal consolidation, modest rate cuts are expected in the first half of 2025. This positive scenario bodes well for the Indian equity market.”
Garima Kapoor, Economist, Institutional Equities, Elara Securities, Mumbai: “High-frequency indicators for the first two months of this fiscal year suggest a stable start to FY25. Although capex momentum has slowed due to elections, the pipeline of approvals indicates private capex will gradually pick up in the latter half. Subdued core inflation and forecasts of a normal monsoon should boost consumption demand. We expect FY25 GDP growth to be around 7%.”
Originally reported in Reuters
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