India's gross domestic product (GDP) surpassed all expectations and stood at 7.8 per cent in the January-March quarter. The full-year 2023-24 GDP has been revised upwards to 8.2 per cent from the second advance estimate of 7.6 per cent, according to data released on Friday by the Ministry of Statistics and Programme Implementation. This surge marks an improvement from the 7.0 per cent growth recorded in the preceding fiscal year, showcasing the resilience and strength of the Indian economy amidst evolving global dynamics. According to the press release, sector-wise analysis further illuminates the economic landscape, with real gross value added (GVA) experiencing a growth rate of 7.2 per cent in 2023-24, compared to the 6.7 per cent growth observed in 2022-23. The manufacturing sector has emerged as a key driver of this growth, witnessing a surge of 9.9 per cent in 2023-24, a stark contrast to -2.2 per cent growth registered in the previous year.
India’s six-week elections comes to end on June 1, with results expected on June 4. The BJP is widely expected to return to office, although there is uncertainty about whether it will be able to expand its majority as Modi has been predicting. Financial markets are bracing for a possible selloff if the BJP loses support, concerned about a possible shift away from economic reforms.
Teresa John, an economist at Nirmal Bang Institutional Equities, said no matter which party forms the government in June, India’s growth will stay robust. There may not be “any significant change in the broad direction of policy irrespective of political party,” she said.
Stronger growth means the Reserve Bank of India will have reason to keep interest rates unchanged for longer, given inflation is still above its 4% target and the US Federal Reserve has delayed its policy easing. Economists including from Goldman Sachs Group Inc. have pushed back their rate-cut forecasts for India to later this year as the US keeps rates higher for longer.