India's GDP grows 7.6% in September quarter, beats RBI estimates

• Manufacturing, mining and services sectors contributed to GDP growth in Q2.
• The GVA in the manufacturing sector showed a growth of 13.9% in the second quarter.
• The output of eight key infrastructure sectors jumped 12.1% in October 2023.

India's economy grew 7.6% in the September quarter of this fiscal and remained the fastest-growing large economy, mainly due to better performance by manufacturing, mining and services sectors, the government data showed on Thursday.

The gross domestic product (GDP) expanded by 6.2% in the July-September quarter of 2022-23. India remained the fastest-growing major economy, as China posted a 4.9% growth in July-September 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,” said Vivek Rathi, National Director Research, Knight Frank India.

Manufacturing picks up pace, agriculture slows

The gross value added (GVA) in the manufacturing sector showed a growth of 13.9% in the second quarter of the current fiscal compared to a contraction of 3.8% in the year-ago period.

“Manufacturing and construction were the clear leaders with growth of 13.9% and 13% respectively. In the case of manufacturing, high profit growth contributed to the buoyancy while construction was up due to housing as well as government capex,” said Madan Sabnavis, chief economist at Bank of Baroda.

As per the data, the output (GVA) in the 'mining and quarrying' accelerated to 10% in the second quarter against a contraction of 0.1% a year ago. Electricity, gas, water supply and other utility services' grew by 10.1% from 6.1%.

“Double digit growth in the industry sector, especially in manufacturing and construction is suggesting that businesses ramped up production to meet the pent-up demand just before the festivals,” said Rumki Majumdar, Economist, Deloitte India.

According to the National Statistical Office (NSO) data, the agriculture sector GVA growth decelerated to 1.2% in the September 2023 quarter from 2.5% a year ago. This was expected due to seasonal effect, say economists.

The construction sector recorded a growth of 13.3% year-on-year in the second quarter compared to 5.7%. The expansion in financial, real estate and professional services' GVA was 6%, down from 7.1% in the year-ago quarter.

“As a derived demand, the upturn in the capex cycle and the strengthening domestic profile of consumers should prove to be strong drivers of India's real estate market. The continuation of the real estate upcycles, coupled with the increased focus on infrastructure development will support the sustained growth of the construction sector,” said Rathi.

Meanwhile, the output of eight key infrastructure sectors jumped 12.1% in October 2023 against 0.7% expansion in the year-ago period on account of a sharp uptick in production of coal, steel, cement and electricity, according to the official data.

The government's fiscal deficit at the end of October touched 45% of the full-year budget estimate, according to data released by the Controller General of Accounts (CGA) on Thursday.

“Personal consumption growth lost momentum and grew only 3.1% YoY. However, it could be a possibility that consumers postponed their spending for the upcoming festive months and may have reallocated funds for investments. Higher consumer spending may get reflected in the October-December quarter,” said Majumdar.

(With PTI inputs)