Wednesday, 09 Oct, 2024
By: Damini Mehta
Source: Getty Images
According to a Reuters poll, India's economic growth was slated to slip below 7 per cent in the October-December period of 2024, for the first time in the current fiscal. This is much closer to the RBI’s projections but quite a divergence from the NSO numbers.
The Indian economy recorded an 8.4 per cent growth rate in quarter three of the ongoing financial year 2023-24. Data released by the National Statistical Office (NSO) shows a 3 percentage point increase compared to the previous quarter when India’s Gross Domestic Product (GDP) grew at a rate of 8.1 per cent. Growth rate in both Q1 and Q2 of the current financial year have also been revised upwards to 8.2 per cent (from 7.8 per cent) and 8.1 per cent (from 7.6 per cent) respectively.
NSO’s growth estimates come on the back of the Reserve Bank of India’s (RBI) recent monetary policy review to keep the repo rate unchanged at 6.5 per cent for the sixth time in a row. The committee also decided to maintain its policy stance on withdrawal of accommodation to ensure that inflation progressively aligns to the target while supporting growth. In its report, the RBI noted that owing to an upward push in vegetable prices, headline inflation or the Consumer Price Index (CPI) in India rose to 5.7 per cent in December 2023, after a moderation in October at 4.9 per cent. However, the RBI estimated a growth rate of 6.5 per cent for the fourth quarter, quite a divergence from NSO’s 8.2 per cent growth forecast.
NSO figures are indicative of a declining growth trend in the manufacturing sector between Q2 and Q3 from 14.4 per cent to 11.6 per cent. The agriculture sector also witnessed a decline in growth from 1.6 per cent Q2 to half or 0.8 per cent in Q4.
According to a Reuters poll, India's economic growth was slated to slip below 7 per cent in the October-December period of 2024, for the first time in the current fiscal. This is much closer to the RBI’s projections but quite a divergence from the NSO numbers which is under the Ministry of Statistics and Programme Implementation of the Government of India. Reuters estimated a growth rate of 6.6 per cent in Q3 of the ongoing financial year, a decline from 7.6 per cent in the Q2 and 7.8% in Q1. NSO also estimates a decline in growth to just 5.9 percent in the last quarter of the ongoing financial year - lowest in five quarters. Apart from this, it revised upwards the growth rate for the current year to 7.6 per cent, 30 basis points higher than the first advance estimate of 7.3 per cent.
India continues to be one of the fastest growing major economies in the world, a consequence of the structural reforms introduced in the banking and taxation sector over the years and the government’s push for larger investment in public infrastructure. However, experts also call for the private sector to pick up on the investment push to support government spending on productive assets for a long term growth.
