India’s economic growth in the first quarter of the fiscal year 2023-2024 (Q1 FY24) is expected to be robust, according to the Reserve Bank of India (RBI). The central bank’s economic activity index nowcast predicts a GDP growth rate of 7.6% for this period. Despite the challenges posed by the pandemic, India’s overall economic activity has shown resilience, as indicated by the sustained momentum in domestic economic conditions.
Key factors contributing to this positive outlook include strong corporate earnings, private consumption, manufacturing, and a record-breaking rabi harvest. Corporate earnings in sectors such as banking and finance have surpassed expectations, driven by robust credit growth and resulting in strong revenue performance overall. Private consumption is expected to be a primary driver of growth in Q1 FY24, supported by a revival in rural demand and increased manufacturing activity facilitated by reduced input costs. Lead indicators, such as mandi arrivals and wheat procurement, suggest the possibility of a record-breaking rabi harvest, which will provide a significant boost to the rural economy and overall economic growth.
The RBI also anticipates an improvement in investment activity. This improvement will be driven by increased capital expenditure in public spending and a moderation in commodity prices. With manufacturing capacity utilization at trend levels, private capital spending will contribute to adding additional capacity as demand continues to pick up, further strengthening the overall economic growth trajectory.
Overall, the RBI’s projections for India’s economic growth in Q1 FY24 are optimistic, reflecting the resilience and positive momentum of the domestic economy. Factors such as strong corporate earnings, private consumption, manufacturing growth, and a record-breaking rabi harvest are expected to drive this robust outlook.
