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India Current GDP 2023: Quarter 2
As India eagerly awaits the release of official Gross Domestic Product (GDP) data for July-September 2023, economists project a growth rate slightly lower than the impressive 7.8 percent recorded in the previous quarter. Strong government-led capital expenditure and a surge in consumption-oriented sectors, particularly in high-end consumption, are expected to underpin India’s growth during this period. In this article, we delve into the key factors shaping India’s economic landscape, offering insights into sectoral trends and growth projections.
Anticipated GDP Growth Rate and Sectoral Contributions
Economists estimate the GDP growth rate for July-September 2023 to be in the range of 6.7-7.0 percent. Despite a likely slowdown from the preceding quarter, the services sector is poised to be the primary contributor to overall growth, even as sectors such as agriculture may witness a slight moderation.
Services are expected to be the major driver of growth, with the gross value added (GVA) in this sector likely to contribute significantly. While financial services and ‘trade hotels and transport’ may experience slower growth, the overall services GVA is anticipated to moderate to 8.2 percent in Q2. Agriculture, forestry, and fishing, on the other hand, are expected to witness a dip in growth due to a decline in output across kharif crops.
India Current GDP 2023: The 7.6% GDP growth in the September quarter has far exceeded the RBI’s 6.5% estimate for the period, ensuring that India remains on the growth path despite multiple global headwinds arising from economic and geo-political uncertainties.
Noticeably, while the share of private consumption in the GDP has decreased, there is a noticeable increase in the share of investments, as reflected in the Gross Fixed Capital Formation (GFCF).
Government Expenditure and Capital Expenditure Recovery
Government-led capital expenditure has played a pivotal role in supporting India’s economic growth. Robust government spending, both at the central and state levels, has fueled the recovery of the capital expenditure cycle. The construction sector has benefited from this, with a notable uptick in steel consumption and cement production. The capital outlay of 25 state governments saw a substantial increase in Q2, reflecting a positive trend in government expenditure.
Growth Outlook and Projections for the Future
Looking ahead, concerns about global growth persist, affecting export demand. The forecast for the overall growth rate in the financial year 2023-24 ranges between 6.2-6.7 percent, considering factors such as input cost pressures and the waning base effect. Both the government and the Reserve Bank of India (RBI) have projected a growth rate of 6.5 percent for the entire financial year.
Global economic challenges, including slowing global growth, export competitiveness, geopolitical risks, and volatile global financial conditions, pose potential headwinds. The slowdown in major economies globally has impacted export competitiveness, although commitments to source components locally for exports present encouraging prospects.
While the first half of the financial year showcased strong growth, particularly in profits for services and manufacturing, the second half may witness a moderation in growth. Factors such as the impact of slowing capital expenditure, the tightening of monetary policies, and variations in demand due to the upcoming elections could influence GDP growth in H2 FY2024. Concerns also surround uneven rainfall, fluctuations in commodity prices, and the cumulative impact of monetary tightening, potentially translating into lower GDP growth.
As India navigates its economic trajectory in the coming months, the release of India current GDP 2023 data for Quarter 2 will provide valuable insights into the nation’s economic health. With a focus on key drivers, sectoral trends, and growth projections, stakeholders can gain a comprehensive understanding of the factors shaping India’s current GDP landscape.
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