February, 29 is a bonus day, thanks to the leap year. And in a befitting way, India's growth took a giant leap with its economic heart beating faster than everyone's expectations.
The second advance estimates released Thursday showed Q3 GDP growth jumping a jaunty 8.4% -- way past consensus projections of 6.8%.
As for the full fiscal year FY24, growth rate is expected to sign off with 7.6%, thanks to private investments, the long-awaited deputy reporting for duty. The projected 7.6% is, again, higher than market and the RBI's estimate of 7%.
Given the election year, the better-than-expected growth performance allows the government to cap off its second term neatly tied with a bow. Though uneven rural recovery and as a result, private consumption, which lost a bit of its roar, seem to be dragging down overall growth, other sub-segments are giving the economy an energetic stir.
In absolute numbers, real GDP is estimated at Rs 172.90 lakh crore, as against FY23's Rs 160.71 lakh crore. In Q3 growth is pegged at Rs 43.72 lakh crore compared to Rs 40.35 lakh crore a year before. On a sequential basis, Q3 growth stood at a modest 4.4%.
For the first nine months of FY24, GDP grew by 8.2% over FY23. While agriculture sector's 1.2% growth is depressingly slow, much like the pace of ants moving grains, industrial sector seems to be having a ripping time with both mining and manufacturing settling for 8.4% and 10.3% growth, respectively. But, services sector, though registered a decent headline growth, its biggest sub-segment trade, hotels, and transport witnessed a rather pale growth of 6.8% as against 14.2% during the same period a year before.
As for Q3, the biggest setback is agriculture, forestry, and fishing that contracted by 0.8%, dragged by lower output of kharif crops. Industrial sector grew relatively better at 9.5%, but that's lower than 12.5% registered in Q2. Analysts say the latter was due to an adverse base effect and a deceleration in volume expansion.
In fact, on the supply side, six out of the eight broad indicators saw lower growth on a sequential basis in Q3, but fared better over the previous year. Two sectors, belonging to services, namely trade, hotels and financial and real estate services turned in higher growth over Q2.
Coming to expenditure side, both investments and consumption gave a helping hand to government expenditure that was striking out alone until now. During Q3, private consumption registered a modest 3.5% growth, as inflation continues to squeeze household budgets. But investments yanked out a neat 10.6% growth over last year, though on a sequential basis, growth remained flat, as if smoothed out by Botox.
"Moving forward, India can be expected to maintain its position as one of the world's fastest-growing economies, surpassing any comparable emerging market countries. However, we may see some near-term moderation due to the inflationary impact of the food prices , geopolitical, and the Red Sea crisis," said Nish Bhatt, Founder & CEO, Millwood Kane International.
