India remains fastest-growing major economy, Q2 GDP growth beats RBI estimates: 5 key takeaways

In the July-September quarter of fiscal 2023-24 (Q2FY24), India's GDP remained the fastest-growing major economy in the world. Government spending and strong performance in the manufacturing, mining, and construction sectors aided GDP growth.

''The real GDP or GDP at constant (2011-12) prices in Q2 2023-24 is estimated to reach 41.74 lakh crore, up from 38.78 lakh crore in Q2 2022-23, representing a 7.6 percent increase over Q2 2022-23,'' data from the Ministry of Statistics and Programme Implementation showed on Thursday, November 30.

Prime Minister Narendra Modi said on Thursday that the GDP growth statistic for the second quarter of this fiscal year demonstrated the Indian economy's endurance and strength in the face of global challenges.

"The GDP growth numbers for Q2 demonstrate the resilience and strength of the Indian economy in the midst of such testing times globally," PM Modi remarked on X. We are committed to assuring quick growth in order to offer more possibilities, speedy poverty eradication, and improved 'comfort of living' for our people."

India Q2 FY24 GDP Growth: 5 Key Takeaways

-India's Q2 Nominal GDP print

Nominal GDP or GDP at current prices is expected to be 71.66 lakh crore in Q2 2023-24, up from 65.67 lakh crore in Q2 2022-23, representing a 9.1% increase from 17.2% in Q2 2022-23. The rate of increase was slightly slower than the previous quarter's 7.8 percent expansion, which was aided by a lower base the prior year.

-Q2 GDP growth sharply above RBI estimates

The Reserve Bank of India's (RBI) growth forecasts and D-Street predictions were both blown out of the water by the September quarter's GDP growth. Real GDP growth for 2023–24 was kept at 6.5% by the RBI, with 6.5% in Q2, 6.0% in Q3, and 5.7% in Q4. Concerned about the rising inflation and the risk it posed to the growth prospects, the central bank expressed extreme worry at its most recent monetary policy meeting.

-Manufacturing, construction sectors support GDP growth

The National Statistical Office (NSO) reports that the growth rate of the agriculture sector's GVA (Gross Value Added) slowed to 1.2% in the September 2023 quarter, down from 2.5% in the previous year. In the second quarter of the current fiscal year, the manufacturing sector's GVA grew by 13.9%, compared to a decrease of 3.8% in the corresponding time last year.

-Govt spending up 12%, Private consumption missed estimates

Government spending increased 12.4% year on year in the September quarter, compared to a 0.7% loss in the previous quarter, although private consumption growth slowed to 3.1% year on year from 6%. Growth in capital formation, a sign of investment, increased to 11% year on year from 8% in the preceding three months.

-India to comfortably grow at 6.5% in FY24: CEA Nageswaran

In response to India's Q2 GDP print, Chief Economic Advisor (CEA) V Anantha Nageswaran stated, ''Based on existing trends, it is probable that India is underestimating its GDP growth rather than overestimating it. We maintain our FY24 GDP growth projection of 6.5%, but we will tweak the figures to see if the July-September growth data adds to the forecast's upside.''