India’s GDP growth continues to outstrip that of the other major economies and inflation expectation is ‘stable’, says Chief Economic Advisor V Anantha Nageswaran. He points out the agriculture sector is likely to witness a revival on account of the withdrawal of El Nino and expectations of a normal monsoon.

India's gross domestic product (GDP) grew 8.4% year-on-year in the October-December quarter of the current fiscal, much higher than the Reserve Bank of India (RBI) monetary policy committee's forecast of 6.5% for Q3 FY24, according to data released by the government on Thursday. Also, the second advance estimates of the national income peg the real GDP growth in FY24 to 7.6% compared with 7.3% estimated in the first advance estimates.

The strong growth in GDP was driven by double-digit growth in the manufacturing sector (11.6%), followed by 9.5% growth in the construction sector, the NSO says in a statement.

“Q3 numbers are very strong at 8.3% year on year. Estimates for full-year growth as a result have gone up to 7.6%. India’s GDP continues to outstrip that of the other major economies. India continues to be an outlier because of the ability to withdraw the Covid stimulus as well as the impetus on capital expenditure,” Nageswaran says, reacting to the national income.

The CEA says the agriculture sector is likely to witness a revival. “Agriculture has remained lacklustre due to erratic monsoon. Prediction for the withdrawal of El Nino makes a case for a good and normal monsoon. Therefore the harvest is expected to be better. Rural demand has been rising for four consecutive quarters,” he says.  

He says private sector investment is showing improvement but is not limited to particular sectors and is broad-based.  “A slight reduction in private final consumption expenditure is not a sign of distress but it shows that demand growth is being evenly distributed than before,” CEA says.  

On inflation, Nageswaran says, “Food inflation has been volatile but food as a share of the expenditure has been coming down. Lower segments have been shielded with PM Anna Yojana. Inflation expectation has remained stable,” he adds. 

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