India’s GDP Skyrockets to 8.4% in Q3, Setting Optimistic Growth Outlook

India witnessed a remarkable surge in its GDP growth rate for the third quarter, soaring to 8.4% year-on-year, surpassing expectations set at 6.6% and outshining the previous quarter’s 7.6% growth.

Data released by the Ministry of Statistics and Programme Implementation on February 29 unveiled India’s GDP growth at 8.4% for the December quarter, marking the strongest growth since the second quarter of 2022 and surpassing forecasts. The National Statistical Office (NSO), in its second advance estimate, projected the country’s growth rate for the fiscal year 2023-24 at 7.6%, revised upward from the initial estimate of 7.3% released in January 2024.

Notable sectoral performances contributed to this growth spurt, with manufacturing surging by 11.6% and the agricultural sector expanding by 3.8%. The revised growth rate for the fiscal year 2023/2024 stands at 7.6%, reflecting a substantial improvement from the previous estimate of 7.3%.

Moreover, gross value added, which excludes indirect tax and subsidies, saw a significant increase, estimated at 6.5% compared to the revised estimate of 4.8% for the same period last year.

Key sectoral insights reveal a mixed performance, with agriculture witnessing a slight decline of 0.8% in Q3 compared to the growth of 1.6% in Q2. Conversely, mining registered growth of 7.5%, up from 11.1% in the previous quarter, while manufacturing expanded by 11.6%, albeit slightly lower than the prior quarter’s 14.4%.

The relatively robust growth trajectory may prompt the Reserve Bank of India to maintain vigilance, particularly in its efforts to curb inflation and achieve its 4% target. While the central bank has kept interest rates unchanged and adopted a relatively hawkish policy stance, concerns persist regarding the potential impact of sustained high borrowing costs on economic growth.