India’s Q1 GDP grows fastest in a year at 7.8%

In line with estimates by many financial institutions, India's economy (GDP) grew fastest in a year at 7.8% in the April-June quarter on an annual basis, data released by the Ministry of Statistics & Programme Implementation's National Statistical Office (NSO) today shows. The country's GDP growth in the said quarter surged to four-quarter high from 6.1% in the previous quarter and 13.1% in the April-June quarter of the last fiscal year.

The higher growth rate was possible due to higher consumption demand, the government's CAPEX push, and strong activity in the manufacturing services sectors.

"The country's real GDP (GDP at constant (2011-12) prices in Q1 2023-24) is estimated to attain a level of ₹40.37 lakh crore against ₹37.44 lakh crore in Q1FY23, showing a growth of 7.8 percent as compared to 13.1 percent in Q1 2022-23," MoSPI says.

The nominal GDP (GDP at current prices) in Q1 FY24 was ₹70.67 lakh crore vs ₹65.42 lakh crore in the year-ago period, up 8 as compared to 27.7% in Q1 FY23, the data shows.

The GDP growth rate estimates of the country remained almost in the range of many financial institutions, though it failed to meet the RBI's projections.

According to the Reserve Bank of India (RBI), the real GDP growth for 2023-24 was projected at 6.5%, with Q1 at 8%; Q2 at 6.5%; Q3 at 6%; and Q4 at 5.7%, with risks broadly balanced.

The central bank also estimated the country's real GDP growth for Q1 FY25 at 6.6%.

Among other financial institutions, SBI Research had estimated the economy to grow between 8.3% in the April-June quarter of FY2022-23, exceeding the RBI forecast. Ratings agency ICRA had projected the GDP growth to improve to 8.5% in Q1 on a boost by the supportive base of Q1 FY2023. Barclays' estimates showed the country's GDP growth at 7.8% in the April-June quarter, with growth expected in Q2.

During the previous quarter (January-March 2023), the Indian economy grew 6.1% on a pickup in manufacturing. The growth for Q4 FY23 was higher than the 4.5% expansion in Q3 FY23. For the whole fiscal year 2022-23, the government's revised estimates showed an expansion of 7.2%.

In terms of growth, India has been touted as a ‘bright’ spot by global financial institutions like the International Monetary Fund (IMF). The IMF analysis shows emerging markets and developing economies, including India and China, are expected to account for about 80% of global growth this year and next, with India alone expected to contribute over 15%.

Due to this reason, despite the economic downturn globally, the IMF has raised India's growth forecast for FY24 to 6.1% from 5.9% projected earlier.

Another major financial institution Moody's Investors Service has said India's economic growth will outpace all other G20 economies through at least the next two years, driven by domestic demand.