India’s Economy Grows 7.6% in September Quarter, Remains Fastest-Growing Large Economy
India’s economy saw growth of 7.6% in the September quarter of the fiscal year, maintaining its position as the fastest-growing large economy. This growth was attributed to better performance by manufacturing, mining, and services sectors, according to government data released on Thursday.
The gross domestic product (GDP) expanded by 6.2% in the July-September quarter of 2022-23, outpacing China’s 4.9% growth in the same period. Vivek Rathi, National Director Research at Knight Frank India, commented on the unexpected growth, stating, “The 7.6% GDP growth in the September quarter has far exceeded the RBI’s 6.5% estimate for the period, ensuring that India remains on the growth path despite multiple global headwinds arising from economic and geo-political uncertainties.”
The manufacturing sector showed significant improvement, with its gross value added (GVA) growing by 13.9% in the second quarter of the fiscal year, up from a 3.8% contraction in the previous year. Madan Sabnavis, chief economist at Bank of Baroda, noted that manufacturing and construction led the way, attributing the growth to high profit levels and government capex.
Other sectors also experienced growth, with the mining and quarrying sector accelerating to 10%, and the electricity, gas, water supply, and other utility services sector growing by 10.1%. On the other hand, the agriculture sector’s GVA growth slowed to 1.2% in the September 2023 quarter from 2.5% a year ago, a trend attributed to seasonal effects.
The construction sector recorded a growth of 13.3% year-on-year in the second quarter, and the financial, real estate, and professional services sector saw a 6% expansion, down from 7.1% in the previous year.
Looking beyond the GDP data, the output of eight key infrastructure sectors in India jumped 12.1% in October 2023 compared to the year-ago period, driven by increased production of coal, steel, cement, and electricity.
However, personal consumption growth slowed to 3.1% year-on-year, a development that may be linked to consumers postponing spending for upcoming festive months. Rumki Majumdar, Economist at Deloitte India, emphasized the potential for higher consumer spending in the October-December quarter.
As the government aims to keep fiscal deficit in check, the data released by the Controller General of Accounts (CGA) indicated that the fiscal deficit at the end of October had reached 45% of the full-year budget estimate.
This encouraging growth in India’s economy, particularly in key sectors, reflects positive trends in the country’s economic landscape despite global economic and geopolitical challenges.
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