India’s GDP Growth May Sink in Future – How and Why?

GDP Growth: According to PTI, which cited estimates from multiple experts, India’s GDP is expected to have expanded between 6.1% and 6.7% in the fourth quarter of the financial year 2023–24. This represents a decrease from the over 8% growth rate seen in the previous three quarters.

On May 31, the government is scheduled to announce the GDP data for the fourth quarter of 2024 (January–March) as well as the preliminary projections for the 2023–2024 fiscal year.

Image Source

The December quarter saw the most growth in India’s GDP in six quarters, at 8.4%. The first quarter of 2022–2023 saw India’s economy grow at its fastest rate yet—13.1 percent, which was later revised down to 12.8 percent.

The overall growth rate for the fiscal year 2023–24 is predicted by economists to be between 7.6% and 7.8%. But earlier this month, V Anantha Nageswaran, the government’s senior economic adviser, stated that there’s a good chance India’s GDP will increase by 8% in FY24.

Image Source

GDP Growth Stats for India’s Economy

The June, September, and December quarters of 2023–24 had 8.2%, 8.1%, and 8.4% growth rates, respectively, for the Indian economy.

According to PTI, Kotak Mahindra Bank Chief Economist Upasna Bhardwaj stated that high-frequency data indicates strong development in a number of different sectors. She mentioned that the hotel and trade sectors had strong fourth-quarter results.

The building and investment sectors should be performing well, and manufacturing has been booming, but the agriculture sector may lag or even decrease this quarter. According to Bhardwaj, “We anticipate a 4.1% GDP increase in the fourth quarter, which should lead to an annual GDP growth of over 7.6%.

Image Source

Estimates issued on May 31, 2023, show that India’s GDP grew by 6.1% in the March quarter of the 2022–2023 fiscal year, with a 7% annual growth rate.

“We expect a moderating of economic activity in the industrial sector as well as in the services sector. Because of this, we anticipate that the GDP will increase to 6.1% in the fourth quarter, but the Gross Value Added (GVA) will only reach 5.7%,” the speaker continued.

See Also Indian Stock Market Response to Previous Elections

While GVA is GDP less net taxes (gross tax collection less subsidies), GDP represents the total value of goods and services generated over a given period.

With an upward bias, Kotak Mahindra Bank estimates a growth rate of 6.6% for the current fiscal year (2024–25). Rural consumption is expected to increase, according to Bhardwaj, but export growth may encounter difficulties in the second half of the fiscal year.

“Exports have been comparatively robust recently. While the effects of disruptions in global demand on exports have not yet been particularly noticeable, we anticipate some in the future. We anticipate that growth in this region may slow down,” she stated.

Bhardwaj added that although demand for consumption in rural areas is anticipated to increase, demand in metropolitan areas may stall. Consequently, the current fiscal year may see an increase in consumption.

According to DK Srivastava, Chief Policy Advisor at EY India, India is expected to have strong growth in the fiscal year 2025—roughly 7%—according to both domestic and foreign organizations.

Image Source

“It is anticipated that GDP growth in the fourth quarter of fiscal year 2024 might exceed 6.5%, resulting in annual growth close to 7.8%, as projected by the IMF,” said Srivastava.

Another rating agency, India Ratings & Research, projects a 6.2% GDP growth rate for the March quarter of 2023–2024.

In the March quarter of the 2023–24 fiscal year, the domestic rating agency ICRA recently predicted that India’s GDP growth will decelerate to a four-quarter low of 6.7%. ICRA projects 7.8% GDP growth for the entire fiscal year 2023–2024.

For 2023–2024, the Reserve Bank of India predicted a 7% GDP growth rate in its monetary policy review from April.

Follow our Blog for more such informative content

FAQs About GDP