Services, construction sectors drive India’s GDP growth to 7.8 pc in Q1

New Delhi, (UNI) Helped by continued growth momentum, especially in the services and construction sectors, India’s gross domestic product (GDP) accelerated to 7.8% in the April-June quarter (Q1) of the current financial year 2023–24.

“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 percent as compared to 13.1 percent in Q1 2022–23,” said the Ministry of Statistics and Programme Implementation (MoSPI) in a release on Thursday.

The Indian economy had logged 6.1% growth in the January-March quarter of fiscal 2022–23.

The GDP estimate for Q1FY24 is largely in line with market estimates, though it is a tad lower than the RBI’s projection of 8%.

As per MoSPI data, India’s nominal GDP, or GDP at current prices, in Q1 2023–24 is estimated at Rs 70.67 lakh crore, as against Rs 65.42 lakh crore in Q1 2022–23, showing a growth of 8% as compared to 27.7% in Q1 2022–23.

“Although a supportive base propelled India’s GDP growth to a four-quarter high of 7.8% in Q1 FY2024, it nonetheless printed below our expectations of 8.5% as well as the MPC’s projection of 8.0%,” said ICRA Chief Economist Aditi Nayar.

Policy-watchers pointed out that GDP growth in Q1 FY24 was bolstered by the construction and service sectors. The government’s capex continued to power the job-intensive construction sector, while the services sector has been on an uptrend ever since COVID’s impact waned.

The official data showed the construction sector grew 7.9% in the April-June period of the current fiscal year, while ‘financial services, real estate, and professional services’ increased 12.2% year-on-year during this period.

‘Trade, hotels, transport, communications, and services related to broadcasting’ grew 9.2% in the April-June quarter of 2023–24.

Manufacturing sector growth stood at 4.7% in Q1 FY24, while the farm sector logged 3.5% growth during this period.

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, said that services as well as construction are driving growth forward.

“Manufacturing sector growth is satisfactory,” he said, adding that lower growth reflects a slowdown in global trade.

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