India's GDP Growth Surges to 7.6% with an 8.4% Spike in Q3
Discover how multiple data adjustments propel GDP growth to 7.6%, with a remarkable 8.4% surge in Q3.
Ankush Pandey
The National Statistical Office (NSO) on Thursday increased India's real GDP growth predictions for this year to 7.6% from the 7.3% predicted last month, causing a flurry of revisions in the economy's growth estimates. Additionally, it increased its 2021–22 growth prediction from 9.1% to 9.7% and decreased its 7.2% growth estimate for 2022–2023 to 7%.
The economy's Gross Value Added (GVA) is expected to grow by 6.9% this year; last year's GVA growth was downgraded by the NSO from 7% to 6.7%. The GDP grew by 8.2% and 8.1% in the first two quarters of this year, and by 8.4% in the third quarter of 2023, which runs from October to December.
The fact that revised forecasts for GVA growth in Q3 dropped to just 6.5% from 8.2% and 7.7% in Q1 and Q2, respectively, surprised economists. Private consumption continued to be a source of concern, increasing 3.5% in Q3 from 2.4% in Q2, and the full-year growth estimate was revised down from 4.4% in early January to 3%.
The farm sector's gross value added (GVA) growth shrank to 0.8% in the third quarter, and for the entire year, growth is now only predicted to be 0.7%, as opposed to 4.7% in 2022–2023. Chief Economic Advisor V. Anantha Nageswaran stated that industrial expansion drove growth this year and he anticipates the farm sector to rebound next year. Construction, up 10.7%; manufacturing, up 8.5% from a 2.2% decline in 2022–2023; and mining, up 8.1% from 1.9% last year, have all contributed to the acceleration of GVA growth.
After contracting by 0.8% in the third quarter, farm sector GVA growth is now only predicted to increase by 0.7% for the entire year, as opposed to 4.7% in 2022–2023. V. Anantha Nageswaran, Chief Economic Advisor, stated that industrial expansion drove growth this year and he anticipates the farm sector to rebound next year. Three important industries have accelerated their growth in terms of gross value added (GVA): mining, up 8.1% from 1.9% last year, manufacturing, up 8.5% from a 2.2% decline in 2022–2023, and construction, up 10.7%.
Struggling Agricultural Sector
The growth boost this year was ascribed by Kotak Mahindra Bank's chief economist, Upasna Bhardwaj, to the lower revision of last year's growth figures, as well as to greater investment and net exports—despite the fact that consumption is still trailing. The fact that the GDP is significantly higher but the GVA estimates for this year have remained steady is more intriguing, the speaker added.
The employment-intensive trade, hotel, transport, communications, and broadcasting services sectors are predicted to see nearly half of their GVA growth—from 12% in 2022–2023 to 6.5% in 2023–2024. Mr. Nageswaran emphasized that this is more of a stability than a decline because it follows two extremely significant upticks in 2021–2022 and 2022–2023.
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Q4 Growth To Dip
The fact that GDP growth is being revised up to 7.6% while GVA growth stays at 6.9% is one of the shocks that need more investigation. Additionally, the average GDP growth for the year's first three quarters is 8.2%, suggesting that the increase in the fourth quarter will only be 5.9%, according to D.K. Srivastava, chief policy adviser at EY India.
The discrepancy statistics for both this year and the previous year show significant fluctuations, which indicates that there is still a lot of noise in the data. The growth of demand-side drivers has interestingly slowed down, according to economists Sunil Kumar Sinha and Paras Jasrai of India Ratings and Research. They also pointed out that consumption demand is still low and still heavily weighted towards goods that are mostly purchased by higher-class households.
