GDP data beats forecasts, grows at 7.2% in FY23
Expands 6.1% in Q4; analysts say too early to celebrate as consumption yet to pick up.
NEW DELHI: India’s economy threw up a surprise in the fourth quarter of FY23 as the GDP grew at a robust pace of 6.1%, beating most estimates. This resulted in a full-year growth at 7.2%, exceeding even the government’s own estimate of 7%.
The higher-than-expected growth in the fourth quarter was aided by healthy growth in construction (10.4%), hotel and transport (9.1%), agriculture (5.5%) and manufacturing (4.5%) sectors. The economy had grown at 4.4% in the third quarter of FY23.
For the current year (FY24), the RBI has projected a GDP growth rate of 6.5%. According to Chief Economic Advisor V Anantha Nageswaran, India can expect another year of solid economic performance. “Risks are more evenly balanced now as envisaged four months ago. There is a good chance that India may exceed this number (FY24 estimate) this fiscal,” he said.
The fourth quarter also saw strong growth of 8.9% in infrastructure investment and asset creation. However, private consumption continues to be a drag as it grew only 2.8% in Q4. Most experts advise caution, saying it’s too early to celebrate.
“We must abstain from reading too much into high-frequency growth numbers. Continued fiscal and monetary policy coordination is crucial,” said Lekha S Chakraborty, professor, the National Institute of Public Finance and Policy.
According to Sunil Sinha, principal economist at India Ratings, the road ahead won’t be smooth if private consumption does not recover fully. ICRA’s Aditi Nayar projects a 6% growth of real GDP in FY24 with a downside risk of 50 bps due to El Nino threat.