Consider the following statements with respect to India’s gross domestic product (GDP) in the September quarter of 2023-24-

I.India’s gross domestic product (GDP) grew at 7.6 per cent in the September quarter of 2023-24 which was higher than the Reserve Bank of India’s projected GDP growth of 6.8 per cent for the second quarter of FY24.

II.Manufacturing & construction sectors showed a slowdown while trade, hotels, transport and communication sectors were the outperforming sectors

III.Government spending, however, picked up and grew at 12.4 per cent in real terms while Gross fixed capital formation (GFCF), which represents investment demand in the economy, grew at 11 per cent.

Which of the following statements is/are correct? 

Solution

India’s gross domestic product (GDP) grew at 7.6 per cent in the September quarter of 2023-24, outperforming expectations by a wide margin as manufacturing and construction activities expanded by double digits. These figures signalled that economic recovery was well underway in Asia's third-largest economy, despite the current adverse geopolitical situation.While the Reserve Bank of India (RBI) had projected GDP growth of 6.5 per cent for the second quarter of FY24.The slowdown in the services sector to a six-quarter low was driven by the trade, hotels, transport, and communication services sub-sector (growth of just 4.3 per cent), which is the largest contributor to GDP.Other services sub-sectors, such as financial and real estate (6 per cent) and public administration and defence (7.6 per cent), also saw a significant slowdown in activity, despite robust credit growth and a pick-up in government spending. Growth in private final consumption expenditure, or private spending, slowed down to 3.1 per cent due to continued distress in rural demand. Government spending, however, picked up and grew at 12.4 per cent in real terms, signalling that both Central and state governments expanded their public expenditure. Gross fixed capital formation (GFCF), which represents investment demand in the economy, grew at 11 per cent— a five-quarter high — because of the frontloading of capex by the government. Export of goods & services grew 4.3 per cent in the second quarter as against a contraction of 7.7 per cent in the previous quarter, indicating resilience in services exports growth despite adverse geopolitical situation.