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India’s Q2 GDP Soars to 7.6%, Outpacing Projections

In a startling turn of events, India’s economy experienced a remarkable growth of 7.6% during the July-September quarter of the fiscal year 2023-24 (Q2FY24). This places India firmly as the fastest-growing major economy globally, as per the recent GDP data unveiled by the Ministry of Statistics and Programme Implementation on November 30.

Key Growth Drivers:

The substantial uptick in GDP was primarily propelled by robust performances in key sectors, including manufacturing, mining, and construction. Notably, government spending played a pivotal role in bolstering economic expansion during this period.

GDP Figures:

  • Real GDP, adjusted for constant prices (2011-12), reached ₹41.74 lakh crore in Q2FY24, marking a significant 7.6% growth compared to the previous year’s 6.2% in the same quarter.
  • Nominal GDP, at current prices, surged to ₹71.66 lakh crore in Q2 2023-24, reflecting a growth of 9.1% from the previous year. However, this pace was slightly slower than the remarkable 17.2% expansion seen in Q2 2022-23.

RBI Projections vs. Actual Growth:

The Q2 GDP growth surpassed both market expectations and the Reserve Bank of India’s (RBI) projections. The RBI had maintained a more conservative outlook, anticipating a real GDP growth of 6.5% for the fiscal year 2023-24.

Sectoral Performance:

  • Manufacturing Sector: Expanded by an impressive 13.9% YoY in Q2, a stark contrast to the 3.8% contraction witnessed in the corresponding period last year.
  • Mining Sector: Accelerated to 10% YoY growth, rebounding from a 0.1% contraction in the previous year.
  • Construction Sector: Registered a robust 13.3% YoY growth, contributing significantly to the overall economic upswing.

Government vs. Private Spending:

  • Government Spending: Surged by 12.4% YoY in Q2, a remarkable turnaround from the 0.7% contraction observed in the previous quarter.
  • Private Consumption: Unexpectedly slowed to 3.1% YoY growth from the earlier 6%, posing a noteworthy contrast to the overall economic momentum.

CEA’s Perspective:

Chief Economic Advisor (CEA) V Anantha Nageswaran expressed optimism about India’s growth prospects, suggesting that the current trends might indicate an underestimation rather than an overestimation of GDP growth. While retaining the FY24 GDP growth forecast at 6.5%, the CEA hinted at a potential upside following the release of the robust July-September growth data. Further analysis will determine the extent of this positive impact on the overall forecast.

Questions Related to Exams

Q1: What is the reported GDP growth rate for India in the second quarter of the fiscal year 2023-24?

A1: India’s GDP grew at an impressive rate of 7.6% in the July-September quarter of FY24, showcasing a robust economic performance.

Q2: How does India’s Q2 Nominal GDP compare with the previous year, and what factors influenced this growth?

A2: The Nominal GDP for Q2 2023-24 is estimated at ₹71.66 lakh crore, displaying a growth of 9.1% compared to the same quarter in the previous year. This growth, though slightly slower than the previous quarter, is attributed to government spending and favorable comparisons with a lower base.

Q3: How does the Q2 GDP growth align with the Reserve Bank of India’s (RBI) projections?

A3: The Q2 GDP growth exceeded both market expectations and RBI projections. While the central bank initially forecasted a real GDP growth rate of 6.5% for FY24 with Q2 at 6.5%, the actual growth of 7.6% suggests a more robust economic performance.

Q4: Which sectors contributed significantly to the GDP growth in Q2 FY24?

A4: Notable contributions came from the manufacturing sector, expanding by 13.9% year-on-year, as well as the mining and construction sectors, which grew by 10% and 13.3%, respectively. These sectors played a crucial role in driving overall economic growth.

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