GDP Growth For FY24 Likely To Approach 8% Threshold: SBI Study

The report highlighted that contrary to expectations, the economy expanded by 8.4 per cent in the third quarter of 2023-24, following over 8 per cent growth in the two previous quarters

The Gross Domestic Product (GDP) growth for the current financial year may be close to reaching 8 per cent, states a study conducted by the State Bank of India (SBI) released on Friday. This comes in the wake of India's 8.4 per cent growth in the December quarter and the upward revision of estimates for the preceding two quarters.

"The third quarter GDP numbers jolted the psyche and cognitive framework of most in markets while sweeping some by a pleasant surprise. Clearly, right policy prisms and perspectives can trump irrational expectations bordering fault lines," said SBI in its research report 'Ecowrap'.

The report highlighted that contrary to expectations, the economy expanded by 8.4 per cent in the third quarter of 2023-24, following over 8 per cent growth in the two previous quarters. Moreover, there was a significant increase in indirect tax collection (32 per cent year-on-year growth), widening the gap between GDP and Gross Value Added (GVA) growth.

"For fiscal 2023-24, GDP growth is expected to increase by 7.6 per cent and GVA growth by 6.9 per cent... we estimate fourth quarter GDP growth at 5.9 per cent, which we believe is an understatement. Thus, it is most likely that FY24 GDP growth could be within striking distance of 8 per cent," the SBI report states. 

The National Statistical Office (NSO) has adjusted the GDP estimates for the first and second quarters of the fiscal year to 8.2 per cent and 8.1 per cent, respectively, up from the earlier figures of 7.8 per cent and 7.6 per cent. Consequently, the GDP growth rate for April-December stands at 8.2 per cent. 

The SBI report also noted that due to government initiatives aimed at enhancing quality of life and preventing benefit leakages through direct benefit transfer, the per capita GDP surpassed the Rs 2 lakh mark for the first time in 2023-24. Additionally, in constant prices, the per capita GDP for the current fiscal year has risen to Rs 1.24 lakh.