India’s economy grew at a faster-than-expected pace of 7.8% year-on-year in the January-March quarter, helped by strong growth in the manufacturing sector, and economists expect the momentum to remain strong this year.
The gross domestic product (INGDPQ=ECI), opens new tab growth in the first three months of 2024, the fourth quarter of 2023/24 fiscal year, was lower than a revised 8.6% expansion in the previous quarter, government data released on Friday showed.
However, it was higher than the 6.7% growth forecast by economists in a Reuters poll.
COMMENTARY
MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL, MUMBAI
“Overall higher FY24 growth also means the base for FY25 to start from will be much higher. The GVA growth is relatively less volatile and the massive GDP-GVA wedge seen in FY24 will likely normalize by FY25.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“FY24 GDP growth is narrowly above our expectation but reaffirms that the economy ended the year on a strong note, with investments growing at a faster pace than consumption.”
MADAN SABNAVIS, CHIEF ECONOMIST, BANK OF BARODA, MUMBAI
“One factor driving up GDP growth has been the high growth of 19.1% in net taxes, which is due to a combination of higher tax collections and lower subsidy payout.”
“We expect GDP growth for FY25 to be around 7.3-7.4% with the base effect pulling down the growth.”
ADITI NAYAR, CHIEF ECONOMIST, HEAD RESEARCH AND OUTREACH, ICRA, GURUGRAM
“With transient factors likely to dampen growth in the first half of FY25, we expect the GDP growth to decelerate from the 8.2% recorded in FY24.”
SACHCHIDANAND SHUKLA, GROUP CHIEF ECONOMIST, LARSEN & TOUBRO, MUMBAI
“Broader story of sustained investment growth and subdued consumption along with flattish government expenditure continues.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“GDP growth surprised again with the wedge with gross value added (GVA) continuing to remain high due to higher growth in net taxes.”
“Sector wise, manufacturing and construction growth continued to remain strong. On the expenditure side, consumption growth edged up from the previous quarter, although remained in low single digits.”
“Going forward, we expect the wedge between GDP and GVA to start normalising from the second quarter of FY25 as government spending goes up, and expect overall GDP growth of 6.5% for FY25.”
SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI
“This year, we expect a meaningful pickup in private consumption and a possible modest deceleration in investment growth. With robust growth and declining inflation, the Indian economy is in an enviable position, poised to remain the fastest-growing major economy in the world.”
“While these strong growth figures may present a challenge for the Reserve Bank of India in its monetary policy decisions, slower inflation and ongoing fiscal consolidation should pave the way for modest rate reductions in the first half of 2025.”
“This emerging scenario bodes well for the Indian equity market.”
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
“The high-frequency indicators during the first two months of this financial year suggest FY25 has started on a relatively stable footing.”
“Although the capex momentum has moderated owing to elections, basis the pipeline of approvals/sanctions, we expect private capex to pick up gradually from the back half.”
“Amid subdued core inflation prints and forecasts of normal monsoon, there should be a fillip to consumption demand hereon. We expect FY25 GDP growth of 7%.”
