India’s Q3 GDP growth: India’s economic performance in the third quarter of the 2023-24 financial year (October-December 2023) defied expectations, recording a robust growth of 8.4% year-on-year. This figure is significantly higher than the 6.7-6.9% growth that analysts had predicted and surpasses the 7.6% growth recorded in the previous quarter. This positive news comes amidst global economic slowdown, solidifying India’s position as the world’s fastest-growing major economy.
Several factors contributed to this impressive growth. The construction sector (10.7%) and the manufacturing sector (8.5%) witnessed significant growth, while the services sector, including trade, transportation, and communication, also registered healthy expansion (6.7%). This growth can be attributed partly to the government’s continued focus on infrastructure development and its efforts to boost domestic manufacturing through initiatives like the Production Linked Incentive (PLI) schemes.
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However, amidst the celebratory mood, there are reasons for caution. The growth in the crucial farm sector remained sluggish at 0.8%, which is a cause for concern considering its vital role in the Indian economy and its contribution to the livelihoods of millions of people. This lackluster performance can be attributed to factors like unfavorable weather conditions and volatile global agricultural commodity prices.
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Further, the gap between the GDP growth rate (8.4%) and the GVA (Gross Value Added) growth rate (6.5%) is concerning. This discrepancy is largely due to a surge in net indirect taxes, which are unlikely to be sustainable in the long term. To ensure sustainable economic growth, India needs to focus on boosting GVA, which reflects the true value addition within the economy.
Another area of concern is the sluggish private consumption growth, which stood at a mere 3.6% in Q3 2023-24. This indicates a lack of demand in the economy, which could potentially hamper overall growth in the future. To address this, the government needs to implement policies that boost disposable incomes and consumer confidence.
In conclusion, India’s Q3 GDP growth is a welcome surprise and a positive indicator of the country’s economic resilience. However, it is crucial to address the underlying concerns regarding the performance of the agricultural sector, the gap between GDP and GVA growth, and the sluggishness in private consumption. By addressing these challenges, India can ensure that its economic growth is inclusive, sustainable, and translates into improved living standards for all its citizens.
By Anamika Singh, Asst. Professor & BMS Coordinator, Sainath Education Trust’s Rajiv Gandhi College of Arts, Commerce and Science.
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