India’s Q1 GDP Growth Surges to 7.8%: Outpacing Global Peers

India’s gross domestic product (GDP) witnessed robust growth in the first quarter of the fiscal year 2023-24 (Q1 FY24), recording an impressive 7.8% year-on-year (YoY) expansion. This growth rate marks a four-quarter high, demonstrating India’s resilience and economic strength despite various challenges.

Compared to the previous quarter, ending in March 2023, which saw a 6.1% growth, India’s economy showed remarkable progress. In the corresponding quarter of the previous year, India’s GDP had grown by 13.5%. These figures firmly establish India as one of the fastest-growing major economies globally.

When juxtaposed with other major economies, India’s Q1 FY24 GDP growth stands out. During the same period, the United States reported a growth rate of 2.1%, the United Kingdom achieved a GDP growth of 0.4%, and China recorded a growth rate of 6.3%. Japan, in the same quarter, saw a 6% YoY growth, while Germany contracted by 0.2%.

“Real GDP or GDP at Constant (2011-12) Prices in Q1 2023-24 is estimated to attain a level of Rs 40.37 lakh crore, as against Rs 37.44 lakh crore in Q1 2022-23, showing a growth of 7.8% as compared to 13.1% in Q1 2022-23,”

– Official Statement

The National Statistical Office (NSO) released this data, which also highlights India’s gross value added (GVA) growth. GVA, which is GDP minus net product taxes and reflects supply-side growth, also expanded by 7.8% during April-June 2023.

Agriculture Sector Shows Resilience

Within India’s economic landscape, the agriculture sector demonstrated noteworthy performance, recording a growth rate of 3.5% during the April-June quarter of 2023. This represents a substantial improvement from the 2.4% growth observed in the same period in 2022-23.

However, the manufacturing sector experienced a deceleration in growth, registering a 4.7% increase in the first quarter of the current fiscal year, compared to a more robust 6.1% growth in the same period the previous year.

Quarterly Trends

Examining the recent GDP growth trends in India, the January-March quarter of 2022-23 witnessed a growth rate of 6.1%, while the October-December quarter showed a growth rate of 4.5%. This indicates a positive trajectory in India’s economic performance.

Investment Activity and Consumption

Gross fixed capital formation (GFCF), a key indicator of investment activity in the country, rose by 7.95% during the June 2022 quarter. While this growth is positive, it represents a decrease from the 20% growth recorded in the same period the previous year. GFCF accounts for 34.7% of India’s GDP.

Private final consumption expenditure (PFCE) and government final consumption expenditure (GFCE) also play crucial roles in the economic landscape. In Q1 FY24, PFCE grew by 5.9%, while GFCE experienced a slight decline of -0.71% compared to Q1 FY23.

Fiscal Deficit

Separate data indicates that India’s fiscal deficit during April-July 2023 stood at Rs 6.06 lakh crore, representing 33.9% of the full financial year’s target. Fiscal deficit is a critical metric to monitor as it reflects the government’s financial health and its ability to manage expenditures.

Expert Opinions

Aditi Nayar, Chief Economist and Head of Research and Outreach at ICRA, shared her insights on India’s GDP growth. She remarked, “Although a supportive base propelled India’s GDP growth to a four-quarter high of 7.8% in Q1 FY2024, it is below our expectations of 8.5% as well as the MPC’s projection of 8%.”

She further elaborated that the GDP growth is likely to moderate in the coming quarters due to factors such as a below-normal monsoon, narrowing differentials with year-ago commodity prices, and a potential slowdown in government capital expenditure as parliamentary elections approach. ICRA maintains its FY2024 GDP growth estimate at 6%, which is lower than the MPC’s projection of 6.5% for the fiscal year.

Suvodeep Rakshit, Senior Economist at Kotak Institutional Equities, added, “The 1QFY24 GDP growth at 7.8% was in line with expectations. As we expected, the services sector along with the construction sector pushed GDP growth in this quarter. Investment growth continued to outpace consumption growth.”

Rakshit projected that this trend is likely to continue over the next few quarters, with GDP growth figures expected to be lower than the Q1 print for the remainder of the year. He highlighted the need to monitor risks to the agriculture sector, the sustainability of capital expenditure by central and state governments, global demand conditions, and the lagged impact of interest rate hikes.


India’s Q1 GDP data for FY24 paints a promising picture of the country’s economic recovery. With a growth rate of 7.8%, India has demonstrated its resilience and ability to outpace several major economies. While challenges lie ahead, experts are cautiously optimistic about India’s economic trajectory for the remainder of the fiscal year.

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