India's GDP Growth For FY24 Estimated At 7 Per Cent: Ind-RA

The services sector is expected to maintain the growth momentum in the fiscal, driven by construction and electricity, Sunil Kumar Sinha, Principal Economist, Ind-RA noted

The GDP data for the fourth quarter and the estimates for FY24 are set to be released by the government on the last day of this month

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India’s GDP growth rate for the January-March quarter is expected to be around 6.7 per cent, India Ratings and Research (Ind-RA) said. The agency said that the growth rate for the 2023-24 fiscal year (FY24) is estimated to be around 6.9 to 7 per cent. 

In a conversation with PTI Videos, Sunil Kumar Sinha, Principal Economist, Ind-RA, said, “We are expecting the fourth quarter growth to be 6.7 per cent and the overall GDP growth for FY24 to be around 6.9-7 per cent.” 

Notably, the GDP data for the fourth quarter (January-March 2024) and the estimates for FY24 are set to be released by the government on the last day of this month. The domestic economy clocked a growth rate of 8.2 per cent in the April-June quarter, followed by 8.1 per cent in the September quarter, and 8.4 per cent in the December quarter in the fiscal under review. 

Sinha explained, “The growth rate in the first two quarters benefited from a low base, though the 8.4 per cent growth rate in the third (October-December 2023) quarter was surprising. When we analyse the data, then what is visible is the wedge between the GVA and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter. The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter.”

Earlier, the Reserve Bank of India, in its last monetary policy review in April estimated that the GDP growth for FY24 should be at 7 per cent. Elaborating on the growth estimates in the current fiscal, Sinha noted, “The GDP is expected to expand at 7.1 per cent.Even if we set aside the tax component, the momentum witnessed in the first and second quarters has continued in the subsequent quarters, and the likelihood is that momentum will continue in FY25.”

The services sector is expected to maintain the growth momentum in the fiscal, driven by construction and electricity, however, mining and industrial output are expected to emerge as laggards, the economist said. 

“The prediction of above normal monsoon (by the Indian Meteorological Department), if it turns out to be true, will see some revival in rural demand, which will support consumption demand, and make it broad-based, instead of skewed currently,” Sinha noted.