NEW DELHI (Diya TV) — India’s economy surged at its fastest pace in one-and-a-half years during the final quarter of 2023, fueled by robust manufacturing and construction activities, thereby bolstering Prime Minister Narendra Modi’s economic credentials just months ahead of a national election. The country’s GDP expanded by 8.4% in the October-December period, significantly surpassing economists’ estimates of 6.6% and outperforming the previous quarter’s growth rate of 7.6%.
“This ongoing growth momentum underscores the resilience of the Indian economy, despite global challenges,” remarked Sunil Kumar Sinha, an economist at India Ratings, emphasizing the sustained industrial growth observed during the quarter. India’s consistent outperformance has positioned it among the world’s fastest-growing economies, with China still grappling with post-pandemic recovery and the eurozone narrowly evading recession.
Revised estimates now project India’s growth for the current fiscal year ending on March 31 to reach 7.6%, up from the earlier forecast of 7.3%. The impressive economic performance ahead of the upcoming elections could fortify Modi’s electoral prospects, given his emphasis on achieving high economic growth.
Modi’s administration has implemented substantial increases in infrastructure spending and introduced incentives to propel manufacturing in sectors such as electronics and semiconductors, aimed at enhancing India’s competitiveness globally. Notably, the manufacturing sector expanded by 11.6% year-on-year in the December quarter, accompanied by double-digit growth in investments and construction.
Despite these strides, challenges persist in rural areas, with the farm sector contracting by 0.8% due to adverse monsoon conditions. This downturn has resulted in subdued rural incomes, affecting demand and growth for major retail companies. Nonetheless, policymakers express optimism regarding rural recovery, foreseeing improved value addition in the farm sector in the coming financial year.
While private consumption saw a modest uptick, government spending experienced a slight contraction during the quarter. However, with a renewed focus on fiscal prudence and increased capital expenditure, India remains poised for sustained growth. IMF executive director Krishnamurthy Subramanian hailed India as “easily” the world’s fastest-growing economy, predicting an 8% growth trajectory for the year.
