India’s GDP growth at robust 7.6% in Q2, sharply above forecasts

Asia's third-largest economy expanded 7.6 per cent in the September quarter, much faster than the 6.8 per cent forecast in a Reuters poll of economists and the Reserve Bank of India's estimate of 6.5 per cent.

New Delhi: India's Gross Domestic Product (GDP) expanded by a robust 7.6 per cent in July-September quarter of the current financial year, sharply higher than the Reserve Bank of India’s forecast of 6.5 per cent, on the back of better-than-expected growth in manufacturing and construction sectors, as per official data released on Thursday.

The July-September period growth of the current fiscal is sharply higher than 6.2 per cent expansion posted in the same period of last year. However, it is marginally lower than 7.8 per cent GDP growth recorded in the first quarter of the current fiscal.

India’s real GDP or GDP at constant (2011-12) prices rose to Rs 41.74 lakh crore in the second quarter of the current financial year as against Rs 38.78 lakh crore recorded in the corresponding period the last year, data released by the National Statistical Office (NSO) showed.

Low inflation played a significant role in boosting the real GDP growth as growth in nominal GDP during the period under review was sharply lower than the corresponding period of the last year.

Nominal GDP or GDP at current prices in Q2 2023-24 is estimated at Rs 71.66 lakh crore, as against Rs 65.67 lakh crore in July-September 2023 period, showing a year-on-year growth of 9.1 per cent. The nominal GDP expanded by 17.2 per cent in Q2 of 2022-23. Despite a higher nominal GDP growth the real GDP expansion in Q2 of 2022-23 was lower when compared with the same period of this year because of higher inflation.

In its October monetary policy review, the RBI had pegged the Q2 GDP growth at 6.5 per cent. The full fiscal growth forecast by the RBI is also 6.5 per cent.

Better-than-expected growth in manufacturing and construction activities boosted GDP numbers in the July-September quarter.

Gross value added (GVA) of the manufacturing sector grew by 13.9 per cent year-on-year in the July-September quarter, up from 4.7 per cent growth recorded in the previous quarter. Construction sector growth jumped to 13.3 per cent in Q2 from 7.9 per cent in April-June period.

However, agriculture sector growth slowed to 1.2 per cent in July-September quarter from 3.5 per cent recorded in the previous quarter.

"The sharp upside surprise to the Q2 GDP figures is a welcome sign especially as it comes in the backdrop of a broad-based pickup across most non-agricultural sectors," said Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank.

"We, however, expect the H2 growth to moderate. Having said that the full year GDP numbers have got a big fillip after today’s figures," she added.

Average growth in the first half of the current financial year stands at 7.7 per cent. Real GDP increased to Rs 82.11 lakh crore in April-September period of the current financial year as against Rs 76.22 lakh crore recorded in the corresponding period of 2022-23. In the first half of 2022-23, GDP growth stood at 9.5 per cent.

GDP at current prices in H1 2023-24 is estimated at Rs 142.33 lakh crore as against Rs 131.09 lakh crore during the corresponding period of previous year, showing a growth of 8.6 per cent. Nominal GDP growth stood at 22.2 per cent in H1 2022-23.