India’s economic landscape for the January-March quarter of 2024 is poised for a growth rate of around 6.7%, as projected by India Ratings and Research (Ind-RA). According to Sunil Kumar Sinha, Principal Economist at Ind-RA, the overall GDP growth for the fiscal year 2023-24 (FY24) is estimated to range between 6.9% to 7%. These insights come ahead of the government’s release of GDP data for the fourth quarter and FY24 estimates, scheduled for the end of this month.
Sinha elucidated on the trajectory, highlighting the growth pattern of the fiscal year. India witnessed a robust growth rate of 8.2% in the April-June quarter, followed by 8.1% in the subsequent quarter and 8.4% in the December quarter of the fiscal under review. The first two quarters benefited from a low base effect, contributing to the substantial growth. However, the surprise came with the 8.4% growth in the third quarter (October-December 2023), largely propelled by increased tax collections. Sinha noted a divergence between Gross Domestic Product (GDP) and Gross Value Added (GVA), indicating that the tax-driven boost observed in Q3 is unlikely to recur in the fourth quarter.
Earlier estimations by the Reserve Bank of India (RBI) suggested a GDP growth rate of 7% for FY24 in its April monetary policy review. Sinha’s analysis diverged slightly, suggesting a GDP expansion of 7.1%, emphasizing the sustained momentum observed across the quarters. He further projected that this momentum is likely to persist into FY25.
In terms of sectoral performance, the services sector is expected to sustain its growth momentum in FY24, predominantly driven by construction and electricity. However, Sinha cautioned that mining and industrial output might lag behind.
Sinha also pointed out the potential impact of the Indian Meteorological Department’s prediction of above-normal monsoon rainfall. A successful realization of this forecast could lead to a revival in rural demand, thereby supporting consumption and broadening its base across the economy.
