India's GDP growth surges to 8.4% in Q3; FY24 growth projected at 7.6%

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. 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.

Meanwhile, the National Statistics Organisation (NSO) has revised GDP growth for Q2 FY24 to 8.1% against the earlier estimate of 7.6%, while that for the first quarter has been revised upward to 8.2% from 7.8%.

As a result, the full-year GDP growth estimate has been revised upward to 7.6% from 7.3% projected earlier.

Economists and financial institutions had projected that economic growth would slow to 6-6.8% in Q3 FY24 amid slew of factors such as slow expenditure push, muted industrial growth and uneven monsoon. SBI Research had estimated GDP to grow at 6.8%, while ICRA pegged economic growth to moderate to 6% in December quarter. 

Meanwhile, another economic data released by ministry of commerce and industry showed that the growth of eight key infrastructure sectors slowed to a 15-month low of 3.6% in January, weighed down by contraction in fertiliser and refinery production.

The combined Index of Eight Core Industries (ICI), measures the combined and individual performance of production of eight core industries - cement, coal, crude oil, electricity, fertilizers, natural gas, refinery products and steel, had grown by 4.9% in December 2023 and 9.7% in January 2023. The eight core industries comprise 40.27% of the weight of items included in the index of industrial production (IIP).