India’s gross domestic product (GDP) growth in the second quarter of FY24 was expected to be good – and this was indicated by Reserve Bank of India’s (RBI) governor Shaktikanta Das about a month back.
Speaking at a media event on October 31, he remarked that the country’s Q2 growth would surprise everyone on the upside, and he was right. The GDP numbers, published on Thursday, surprised all pundits of economy who expected the growth this quarter at 6.8%. The actual number of 7.6%, however, belied all forecasts.
The sign of this kind of growth was quite evident when the government released the monthly revenue collection data for Goods and Services Tax (GST) on November 1, 2023. The monthly GST collection, which reflects actual business activities, in October this year surged to ₹1.72 lakh crore, the second highest monthly collection since the new indirect tax regime started in July 2017. Besides that, the core Index of Industrial Production (IIP) growth averaged 9.7% in the second quarter of FY24, and PMI – both manufacturing and services — also showed high levels at an average of 57.9 and 61.1, respectively.
Thus, continued the journey of India as the fastest growing major economy of the world. And this growth momentum is here to stay. This was reflected in a recent report.
S&P Global Ratings’ credit analysis report — “China Slows, India Grows” – earlier this week said that Asia-Pacific’s growth engine was expected to shift from China to South and Southeast Asia, with India at the helm to see its GDP growing to 7% by 2026. And this is evident.
India’s growth story is also significant because it is against a stormy global headwind. Union finance minister Nirmala Sitharaman earlier this week said that global headwinds are affecting Indian economy adversely, but domestic strengths are supporting India’s high growth. India’s large captive domestic market, purchasing power of its middle class, and stable policies continue to drive its economic growth, despite global headwinds and geopolitical challenges, she said. HT had reported it on Tuesday.
Commenting on the latest GDP numbers, Chief economic advisor V Anantha Nageswaran on Thursday said that the growth prospects of the Indian economy appeared bright even as external factors posed a downside risk. He too gave credit to the government’s policies to maintain a high growth rate that included huge capital expenditure, expansion of public digital platforms, PM GatiShakti, National Logistics Policy, and Production-Linked Incentive (PLI) schemes.
Indeed the 7.6% GDP growth in Q2 on the back of substantially strong 7.8% growth rate in the first quarter is a major achievement. It turns out to be a bigger achievement mainly because the Q2 growth has substantial contribution of India’s strong manufacturing sector.
As a result of right policies and calibrated incentives, the government has achieved a 7.7% GDP growth in the first half of 2023-24. With this kind of lead over other major economies, India is likely to outperform other large economies in the full FY24.