India's economic engine, while still running strong, showed signs of a measured slowdown in the final quarter of the last fiscal year. According to official data released by the National Statistical Office (NSO), the country's Gross Domestic Product (GDP) grew by 7.8 percent in the January-March quarter (Q4) of the 2023-24 financial year. This marks a deceleration from the revised 8.6 percent growth recorded in the preceding October-December quarter.
Full-Year Performance and Key Sectoral Trends
Despite the quarterly moderation, the broader picture for the year remains impressive. For the entire 2023-24 fiscal year (FY24), the Indian economy expanded by a robust 8.2 percent. This figure is a significant uptick from the 7 percent growth registered in the 2022-23 financial year. The growth was primarily driven by a strong performance in the manufacturing and construction sectors.
A closer look at the Gross Value Added (GVA), which is GDP minus net product taxes, provides more nuance. The GVA growth for Q4 FY24 stood at 6.3 percent, a step down from the 6.8 percent in Q3. For the full year, GVA growth is estimated at 7.2 percent. This discrepancy between GDP and GVA growth is largely attributed to higher net taxes.
Sectoral Drivers and Drags
The sectoral data reveals a mixed bag. On the positive side, manufacturing GVA saw a notable surge of 8.9 percent in Q4, compared to a modest 1.4 percent in the same quarter last year. The construction sector also remained a powerhouse, growing at 8.7 percent. However, the crucial agriculture sector faced headwinds, with its GVA growth slowing to just 0.6 percent in Q4 from 4.7 percent a year ago, reflecting the impact of uneven monsoon patterns.
The services sector, a major employment generator, showed steady but varied growth. While financial, real estate, and professional services grew at 7.6 percent, trade, hotels, transport, and communication services expanded by 6.8 percent. Public administration and defense services grew at 7.7 percent.
Economists Weigh In on the Road Ahead
The release of the GDP data has sparked analysis from economists and financial institutions. The moderation in Q4 growth was largely anticipated by the market. The focus now shifts to the current fiscal year (FY25), where growth projections are slightly more conservative, hovering between 6.5 to 7 percent, as forecast by the Reserve Bank of India and other bodies.
Key factors that will influence the economic trajectory include the progress and distribution of the 2024 monsoon season, which is critical for agriculture and rural demand. Furthermore, the evolving global economic environment and the continuity of government capital expenditure will play decisive roles. The healthy full-year growth of 8.2 percent provides a solid foundation, but sustaining high growth rates will require navigating both domestic and international challenges.
In summary, the Indian economy concluded FY24 on a high note with an 8.2 percent expansion, despite a predictable sequential slowdown in the last quarter. The performance underscores resilience but also highlights areas like agriculture that need attention for balanced and sustainable growth in the coming years.
