The Indian economy will grow at 7.6 per cent in the ongoing financial year (2023-24) as per the National Statistical Office’s second advance estimates of national income. GDP growth for the year has now been pegged to be higher than the NSO’s first estimate of 7.3 per cent. However, both estimates have pegged gross value added (GVA) to grow at 6.9 per cent this year.
This could imply that the difference between the two estimates may, in part, lie in net taxes on products. This gap reflects in the third quarter data as well — while GVA growth has been estimated at 6.5 per cent, GDP growth has been pegged at 8.4 per cent.
According to analysts, the gap stems from a surge in net taxes on products. This may not be sustainable. There have also been substantial revisions in the previous data. Accounting for them, value added in the economy has declined from 8.2 per cent in the first quarter to 6.5 per cent in the third quarter.
The sector wise data reveals the subdued performance of the agricultural sector. It has been estimated to grow at a mere 0.7 per cent in 2023-24, down from 4.7 per cent in 2022-23. Value added by the sector, in fact, fell by 0.8 per cent in the third quarter of this year. On the other hand, the industrial sector (mining, manufacturing, electricity, gas and water supply, and construction) has picked up pace, growing at 9 per cent this year. The healthy performance of the sector is on the back of a pick-up in manufacturing and a sustained performance in construction.
The manufacturing sector, which had contracted by 2.2 per cent last year, is now expected to grow at 8.5 per cent this year. This also reflects in the data from the index of industrial production. Alongside, the construction sector is pegged to grow at 10.7 per cent this year, up from 9.4 per cent last year. The services sector, though, has seen a mild deceleration when compared to last year.
Segments — trade, hotels, transport and communication, financial, real estate and professional services, and public administration — have grown at a slower pace this year. Despite the economy growing at a healthy pace, consumption continues to disappoint. Private spending grew by just 3.5 per cent in the third quarter, and is expected to grow at 3 per cent for the full year.
This touches off questions. Investment activity, though, continues to remain heartening, growing at 10.2 per cent for the full year. But implicit in the NSO’s latest estimates is that the economy is likely to grow at 5.9 per cent in the fourth quarter.
