By releasing the GDP figures of the first quarter of the financial year, the government has completely shown that India's economic pace is the fastest. According to the data, the growth rate of GDP in the first quarter has also reached a one-year high of 7.8 percent. The main reason for this growth is the capital expenditure made by the central and state governments. Along with this, strong consumption demand is also being considered.
The credit can also be given to the service sector. There was a growth of 8 percent in nominal GDP at current prices in the quarter. Whereas in the first quarter of FY2023 it was 27.7 percent. So let us move towards the reasons due to which India's GDP is witnessing tremendous growth.
Reason for boom in all sectors
Contact intensive sectors including trade, hotel, transportation and communication saw a growth of 9.2 percent in the June quarter of the current financial year. This number has seen a slight increase compared to the previous quarter when it was 9.1 percent.
Real estate and financial sector has also seen a growth of 12.2 percent on annual basis.
Growth has also been seen in construction, mining and manufacturing sectors. These three saw an increase of 7.9 percent, 5.8 percent and 4.7 percent respectively.
According to government data, agriculture and electricity sectors recorded a growth of 3.5 percent and 2.9 percent.
Private consumption, which accounted for 57.3 percent of GDP, grew at the rate of 6 percent in the first quarter of FY 2024.
Boom in service sector
Economists have given most credit for this growth to the improvement in India's service sector. Rahul Bajoria said in a media report that high-frequency indicators for air and rail travel confirm continued stable demand in the transport sector, although capacity constraints have returned to pre-Covid levels of activity, even after the previous quarter. There has been some decrease in speed in comparison. ICRA Chief Economist Aditi Nair, while estimating the growth rate, said that the pace of growth in the financial year has been seen due to the continuous increase in demand from the service sector and improvement in investment activity, especially the increase in government capex.
Increase in capital expenditure is also a reason
Capital expenditure is another important factor which has contributed significantly in increasing GDP growth. The Narendra Modi government has laid a lot of emphasis on capital expenditure in recent months. Capital expenditure during April-June 2023 has increased to about Rs 2,78,500 crore from Rs 1,75,000 crore during the same period of the previous fiscal.
The central government probably spent 27.8 percent of the budgeted amount in the first quarter, while state governments spent 12.7 percent. In addition, capital expenditure by the Center and 23 states (except Arunachal Pradesh, Assam, Goa, Manipur and Meghalaya) grew by 59.1 per cent and 76 per cent on a year-on-year basis.
RBI estimate
RBI expects India to grow at the rate of 6.5 percent in fiscal year 2024. However, uneven monsoon due to El Nino concerns could impact India's consumption revival, in a scenario where global growth rates are slowing. According to the India Meteorological Department (IMD), monsoon rainfall during 2023 is expected to be "below normal" or below "normal" after ending August with a 36 per cent deficit, the worst in 122 years. Is.
IMD Director General M Mohapatra said that we are likely to record normal or below normal monsoon rainfall this year, but we are not changing our forecast. We had estimated that we are likely to record 96 per cent monsoon rains with an error margin of +/- 4 per cent. We'll be within that error margin.
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