In Q1FY24, India’s GDP growth printed at a robust 7.8% YoY, up from 6.1% YoY in the previous quarter. The growth was largely propelled by strong expansion in ‘Financial services, real estate and professional services’. ‘Trade, hotels, transport, and communication’ also registered healthy growth while manufacturing sector growth remained comparatively subdued.

Private consumption recovered in Q1FY24, while government consumption contracted on weak revenue expenditure. Investments growth remained robust, possibly on account of the front-loading of government capital expenditure. There was a large negative contribution from external trade on account of contraction in exports. Note that discrepancies in Q1FY24 estimate were exceptionally large.

FY24 GDP growth expected to range between 6-6.5% YoY. Weak external demand, uneven monsoon distribution and global financial volatility pose downside risks to the outlook. On a positive note, the resurgence in private sector capital expenditure bodes well for long-term growth.

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