India Q4 GDP LIVE updates: Q4 GDP growth of 6.1% beats estimates, overall FY23 growth at 7.2%; what to expect ahead?

Economists and experts gave thumbs up to the expansion in GDP growth to 6.1% in Q4FY23. Overall, FY23 economy's growth was at 7.2% which is also impressive. India's CEA believes that the economy will see solid performance in the current fiscal FY24. 

What will be India's economic growth in FY24?

Aditi Nayar, Chief Economist and Head - Research and Outreach, ICRA projects growth of real GDP in FY2024 at 6.0%, with a downside risk of up to 50 bps in the event that an El Nino affects the monsoon rains. At the same time, frontloaded capex by the GoI and the States and a rapid execution of infra projects could provide an upside to our GDP estimates for the fiscal. We foresee the nominal GDP growth at 10.0% for FY2024.

Further, Nayar said, "Inflation is expected to moderate in FY2024 relative to FY2023 which is a positive for household budgets and consumption. However, the rise in home loan EMIs and its impact on the budgets of urban households and their consumption demand, contraction in exports and their impact on employment, and the impact of a potential El Nino on crops, food prices and farm incomes remains to be seen."

Currently, both Sensex and Nifty 50 are racing towards their lifetime high. On Wednesday, Sensex settled the day by falling 346.89 points or 0.55% to 62,622.24. Nifty 50 dipped by 99.45 points or 0.53% to close at 18,534.40.

In May month, both Sensex and Nifty 50 have climbed over 2% each.

Post the GDP numbers, Gaurav Dua, Head - Capital Market Strategy, Sharekhan by BNP Paribas said, "Nifty has broken out of the 2,000 points range of 16,000-18,000 level and the market seems to be set to scale new peak in H2 of 2023. Interestingly, the broader markets are also doing well after a corrective phase of 18-20 months post peaking out in October 2021. We remain constructive on equity markets given our conviction on the beginning of a multi-year upcycle in the Indian economy ahead."

Indian government achieved the fiscal deficit target of 6.4% of GDP in FY23. Upbeat gross tax collections and thrust on capex have been the major highlights of the Centre’s fiscal performance during the year.

What to expect in FY24?

Rajani Sinha, Chief Economist, Care Ratings said, in FY24, "we expect the growth in gross tax revenue to witness some moderation on account of lower nominal GDP growth. On the non-tax revenue front, the RBI’s transfer of ₹87,416 crore is positive compared with the transfer of ₹30,307 crore in the last fiscal. Dividend pay-out from the RBI alone has exceeded the budgeted amount of ₹48,000 crore from RBI, nationalised banks, and financial institutions collectively. This is expected to support the government finances in the current fiscal amid slow disinvestment receipts."

Sujan Hajra - Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers:

Going forward, we expect India's growth to remain around 6% for the financial year ending March 2024. Despite the likely slow down during the current financial year, we expect at least modest pickup in private consumption demand. The compulsions of fiscal consolidation can depress final consumption demand by government. Barring better than expected acceleration in private capital expenditure, we would also expect deceleration in the growth of fixed investment

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE said that the GDP numbers indicate that the Indian economy has emerged as an outlier after maintaining the growth rate at a higher level as compared to global economies following the breakout of the pandemic.

Further, Magazine added, the country’s growth story continues to be aided by strong domestic demand coupled with strengthening activity in the services sector. Outlook for Investment and consumer momentum too is expected to underpin solid growth prospects. Emerging economic trends indicate that India continues to be on its expansion trajectory.”

Read here: CEA V Anantha Nageswaran expects India's inflation to moderate to 5% in FY24, economy growth prospects solid

According to Umesh Kumar Mehta, CIO, SAMCO MF, The Q4 GDP numbers are a pleasant surprise at 6.1%, thereby depicting a strong revival in the Indian economy contrary to expectations and macro challenges. The momentum has picked up pace and there is a broad-based recovery from manufacturing, mining to construction and farm sectors."

Mehta added, "The surprise element was the farm and agriculture sectors whilst manufacturing growth was more or less inline. There is an overall revival in economic activity due to the investments from the Government being extremely strong but the consumption side is yet to catch up which is a downer. This capex led mode is surely keeping our economy afloat compared to other major global economies. We expect good upside from the markets and some revisions from the RBI in its upcoming policy meetings.”

Amidst GDP data, FIIs bought ₹3,405.90 crore worth of Indian equities on Wednesday, on the other hand, DIIs sold ₹2,528.52 crore.

With that, FIIs stay as net buyers in May with an inflow of ₹27,856.48 crore --- which is the highest monthly buying of 2023 as of now. DIIs, however, are net sellers with an outflow of ₹3,306.35 crore in May.

Read here: FIIs end May month with a bang, inflow of ₹27,856.5 crore in Indian stocks; DIIs are net sellers

Vivek Rathi-Director Research, Knight Frank India:

A 7.2% economic growth in FY23, indicates resilience in India’s economy despite multiple global headwinds during the year arising from economic and geo-political uncertainties.

Domestic investments as well has indicated some strength, as seen in 9.6% growth in GCF. Growth in investments is crucial for a sustenance of long-term economic growth.

So far, the real estate sector has remained strong despite multiple headwinds arising from aggressive interest rate hikes and consumer inflation. This indicates the strong consumer preferences towards home ownership. Since real estate is a derived demand, a sustenance in the economic growth is beneficial to the sector.

Going forward, government initiatives such high allocation to infrastructure spending, and policies to promote domestic manufacturing such as PLIs should be supportive of India’s long term economic growth.

Prithviraj Srinivas, Chief Economist, Axis Capital:

"March 2023 quarter GDP growth surprised positively at 6.1% YoY vs our 5.4% estimate. In sequential, seasonally adjusted annualized terms, the economy picked up to 10%, helped by most segments on the supply side. Meanwhile, investments and net exports played a key role on the demand side of GDP. This growth has come in spite of higher interest rates and weaker real income growth. Both parameters are likely to see improvement in the quarters ahead which should help sustain the robust pace of activity."

- Growth in real GDP during 2022-23 is estimated at 7.2 per cent as compared to 9.1 per cent in 2021-22.

- Q4 GDP estimated at ₹43.62 lakh crore, as against ₹41.12 lakh crore in Q4 2021-22, showing a growth of 6.1 percent.

- India's manufacturing sector saw a sharp slowdown in growth to 1.3% in FY23 versus 11.1% in the previous fiscal.

- GVA in agriculture, forestry and fishing saw a growth of 4% in FY23, rising from 3.5% in FY22.

- Financial, real estate and professional services recorded a growth of 7.1% versus 4.7% in FY22.

- Construction sector also slowed down to 10% growth in FY23 versus 14.8% in FY22.

- India's per capital national income (net) rises to ₹98,374 crore in FY23, as against ₹92,583 crore in FY22.

Ritika Chhabra- Quant Macro Strategist – Prabhudas Lilladher PMS:

“The Q4 growth number is a big surprise. In particular, on production side, agriculture growth at 5.5% is much better than expected, despite the unseasonal rains we saw in Jan-March period. The services growth has come on expected lines, supported by robust growth in trade, hotels and financial services. On expenditure side, the major contributor to the growth is capital formation (at 8.9%) driven by investment expenditure by the government. However, a mere 2.8% growth in private consumption expenditure indicates waning private sector demand, which is a concern.”

Sunil Damania, Chief Investment Officer, MarketsMojo:

According to recent data, India's GDP for the January to March quarter has exceeded expectations, growing at a rate of 6.1 per cent compared to the estimated growth of just above 5 percent. This positive development is certainly good news for the Indian economy. However, there are ongoing challenges for the fiscal year 2024, as the global economy is slowing down, leading to lower exports for India over the past three months.

Read more here: Market reactions to GDP data which slows to 7.2% in FY23

Data from the NSO revealed that India's per capital national income (net) rises to ₹98,374 crore in FY23, as against ₹92,583 crore in FY22.

Overall, in the mentioned fiscal year, the net national income stood at more than ₹136.04 lakh crore compared to nearly ₹126.71 lakh crore witnessed in FY22.

The government final consumption expenditure (GFCE) inched higher to ₹15,77,306 crore in FY23 as against ₹15,75,281 crore in FY22.

Private final consumption outperformed the government final consumption.

As per the data, private final consumption expenditure (PFCE) was among the major indicators to drive GDP. PFCE came in at ₹93,58,694 crore in FY23 versus ₹87,03,541 crore in FY22 and ₹78,24,496 crore in FY21.

India's manufacturing sector saw a sharp slowdown in growth to 1.3% in FY23 versus 11.1% in the previous fiscal.

Mining and quarrying sector posted a growth of 4.6% in FY23 versus 7.1% in FY22. Electricity, gas, water supply and other utility services saw a moderation to 9% in FY23 as against 9.9% in FY22.

Construction sector also slowed down to 10% growth in FY23 versus 14.8% in FY22. Lastly, public administration, defence and other sevices sector registered a growth of 7.2% in FY23, moderating from 9.7% in FY22.

Under GVA, manufacturing sector recorded a sharp slowdown in growth to 1.3% in FY23, as against double-digit growth of 11.1% in FY22.

Surprisingly, in value terms, the provisional estimates of manufacturing sector was at ₹26,17,059 crore in FY23 as against ₹25,82,473 (1st RE) crore in FY22.

GVA in agriculture, forestry and fishing saw a growth of 4% in FY23, rising from 3.5% in FY22. In rupee terms, the provisional estimates stood at ₹22,34, 269 crore in FY23, versus ₹21,49122 crore in FY22.

Further, GVA in trade, hotels, transport, communication and services related to broadcasting, posted a growth of 14% in FY23 as against 13.8% in FY22.

Meanwhile, financial, real estate and professional services recorded a growth of 7.1% versus 4.7% in FY22.

The gross value added (GVA) of India at basic prices saw a growth of 7% in FY23, moderating from 8.8% in FY22.

The country's nominal GDP or GDP at Current Prices in the year 2022-23 is estimated to attain a level of ₹272.41 lakh crore, as against ₹234.71 lakh crore in 2021-22, showing a growth rate of 16.1 percent.