India’s Economy Surges 8.4% in Q3, Beats Expectations
India’s economy recorded a strong growth of 8.4% in the third quarter of the fiscal year 2023-24 (October-December 2023), according to the data released by the National Statistical Office (NSO) on Thursday. This was significantly higher than the analysts’ estimates, which ranged from 6.5% to 7.5%. The growth rate was also higher than the previous two quarters, which registered 8.2% and 8.1% respectively.
The robust performance of the Indian economy was driven by the recovery of various sectors, especially manufacturing, which grew 11.6% in Q3, compared to a contraction of 4.8% in the same period last year. Other sectors that contributed to the growth were construction (9.5%), electricity, gas and other utility services (9%), trade, hotels, transport, communication and services related to broadcasting (8.9%), and financial, real estate and professional services (8.8%). The only sector that contracted in Q3 was agriculture, forestry and fishing, which declined by 0.8%, due to the adverse impact of the monsoon and the pest attacks.
The NSO also revised its growth estimate for the full fiscal year 2023-24 to 7.6%, up from 7.3% projected in the first advance estimate released in early January. This implies that the Indian economy is expected to grow by 6.9% in the fourth quarter (January-March 2024), which is lower than the previous three quarters, but still higher than the pre-pandemic level of 5.7% in Q4 of 2021-22. The NSO also revised its growth estimate for the previous fiscal year 2022-23 to 7%, down from 7.2% estimated earlier.
The impressive growth of the Indian economy in Q3 reflects the resilience and adaptability of the businesses and the consumers, who have overcome the challenges posed by the Covid-19 pandemic and the subsequent lockdowns. The government’s fiscal and monetary stimulus measures, such as the Atmanirbhar Bharat package, the production-linked incentive scheme, the emergency credit line guarantee scheme, and the repo rate cuts, have also supported the recovery of the economy. The improvement in the vaccination coverage, the easing of the Covid-19 restrictions, the festive demand, and the global recovery have also boosted the economic activity and the consumer confidence.
However, the Indian economy also faces some headwinds and uncertainties, such as the rising inflation, the high unemployment, the fiscal deficit, the banking stress, the infrastructure bottlenecks, the environmental issues, and the geopolitical tensions. The emergence of new variants of the Covid-19 virus, such as the Omicron variant, also poses a risk of a resurgence of the pandemic and a disruption of the economic recovery. Therefore, the Indian economy needs to maintain its growth momentum and address its structural challenges, while also ensuring the health and safety of its population.
The Indian economy has shown a remarkable performance in Q3, surpassing the expectations and the global standards. The growth rate of 8.4% is the highest among the major economies in the world, and also the highest for India since the first quarter of 2016-17. The Indian economy has also regained its position as the fifth-largest economy in the world, overtaking the United Kingdom and France. The Indian economy has demonstrated its potential and its promise, and has emerged as a bright spot in the global economic landscape.
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