India’s Economic Engine Roars: Q2FY24 GDP Growth at 7.6%

In Q2FY24, India’s GDP growth at 7.6% affirms its position as the world’s fastest-growing major economy, slightly down from the previous quarter’s 7.8%. H1FY24 records a commendable 7.7% real GDP growth.

Real GDP rose significantly from Rs.38.78 lakh crore in Q2FY23 to Rs.41.74 lakh crore in the current quarter. Nominal GDP also sees an increase from Rs.65.67 lakh crore to Rs.71.66 lakh crore.

Driving this momentum are substantial growth rates in manufacturing (13.9%), construction (13.3%), and electricity, gas, water supply, and utility services (10.1%). Mining and quarrying contribute with a solid 10% growth, signaling a robust overall economic resurgence.

October showcases impressive core sector growth, notably in cement and electricity sectors, recording 17.1% and 20.3% YoY growth, respectively.

The investment landscape witnesses broad-based improvement, fueled by increased state and central spending, real estate sector rebound, and inventory surge before festivities.

India’s consumer market is poised to be the world’s third-largest by 2027, with 25.8% of Indian households reaching $10,000 in annual disposable income, indicating the resilience and potential of the country’s consumer base.

Challenges persist, particularly in urban areas. Monetary tightening and recent RBI regulatory adjustments for personal loans and credit cards could potentially curb credit growth and discretionary spending among urban households.

Meeting the Government of India’s capex target for the fiscal year necessitates a substantial 30% YoY growth in H2FY24, presenting a challenge amid impending General Elections in early 2024.

Urban unemployment decreased to 8.4% in October 2023 from 8.9% in September, while rural unemployment reached a 40-month high at 10.8%. Weak rural demand, attributed to low real wage growth and erratic monsoon patterns, is evident in the modest 3.1% growth in consumption during the second quarter, signaling that certain segments of the economy are yet to fully recover.

India’s Q2FY24 GDP growth at 7.6% showcases economic resilience, driven by robust manufacturing, construction, and core sector expansion. Despite challenges, the consumer market thrives, but rural consumption still lags, and urban areas face potential credit constraints and election-related capex hurdles.

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