GDP Growth In Q1 Reached A Four-Quarter High Of Nearly 8%.

However, economists anticipate that growth will drop in the remaining quarters of this fiscal year.

Strong domestic demand, an improvement in the services sector, and the government’s focus on capital spending are all credited with helping the Indian economy grow at an estimated 8%, a four-quarter high.  

According to the majority of private agencies, GDP growth was between 7.8 and 8.5% in the three months that ended June 30, which is generally in line with the Reserve Bank of India‘s forecast of 8% growth for the time period. However, growth is probably going to slow down in the following quarters, and the GDP projection for the entire fiscal year is still expected to be between 6% and 6.5 %. The first quarter’s data will be made public on August 31.

Due to the return to normalcy of operations following the epidemic, the economy expanded by 13.1% in the first quarter of 2022–2023. However, in the final quarter of the fiscal year, growth fell to 6.1%. 

According to India Ratings and Research, the first quarter’s GDP growth will be 7.9%. The GDP growth in the first quarter of FY24 would be supported by stable government capital spending and benign commodity prices. The resurgence of the services sector would drive development from the supply side, according to India Ratings’ principal economist Sunil Sinha. 

India’s GDP was predicted by Barclays to have increased by 7.8% in the first quarter. “Headline growth is anticipated to pick up speed in Q2, reaching a four-quarter high and bringing high-contact services’ recovery to a successful conclusion. While overseas demand is waning, domestic demand continues to be the main economic engine of activity, according to Rahul Bajoria, MD and Head of EM Asia (ex-China) Economics at Barclays.  

Acuité Ratings & Research Suman Chowdhury, Chief Economist and Head of Research, claims Due in part to the favorable base, GDP growth is expected to be strong in the first quarter at roughly 7.5% YoY, but subsequent quarters’ growth prints are anticipated to be 150–200 basis points lower. For the time being, “we maintain our forecast of 6% for FY24,” the man remarked. 

Other organizations, which are more upbeat, have suggested that the economy may have expanded by more than 8% in the most recent quarter.  ICRA predicted that the GDP will rise by 8.5% year over year (YoY) in the first quarter, helped by the favorable base of Q1 FY2023, when the Indian economy was returning to normal following the Covid-19 pandemic. It went on to predict that gross fixed capital formation would have experienced double-digit growth in the first quarter. 

The first quarter of 2023–2024 is expected to see quarterly GDP growth of 8.3%, according to an SBI Ecowrap analysis. In Q1, capital expenditures increased significantly, with the federal government spending 27.8% of the allocated capex and the states spending 12.7% of the budgeted capex, according to the report. 

It added that agriculture sales have been robust and power supply has been high, and that manufacturing is still going strong as evidenced by stronger IIP, automotive sales, and PMI data. “On the services side, passenger traffic picked up in Q4FY23 and has sustained, while Air cargo traffic increased,” it added. The organization anticipates that GDP growth in 2023–2024 will be higher than the RBI’s forecast of 6.5%.