India’s Economic Surge: A Detailed Look at FY24’s 8.2% Growth
India's economy exhibited robust growth in the fiscal year 2024, with an impressive annual growth rate of 8.2%compared to the 7% growth in FY23. The fourth quarter alone saw a GDP increase of 7.8%, underscoring the resilience and dynamism of the Indian economy. This blog delves into the sectoral performance, annual and quarterly insights, and the key drivers behind this growth.
Annual Performance: FY24
The 8.2% growth in FY24 was driven by a combination of strong domestic consumption, government spending, export performance, private investment, and agricultural output. Here’s a closer look at the sectoral contributions:
Agriculture: The agricultural sector grew by 4.5% in FY24, supported by a good monsoon season and favorable government policies. Enhanced crop yields and increased farm incomes contributed significantly to rural consumption and overall economic growth.
Industry: The industrial sector expanded by 6.7%, with manufacturing, construction, and mining sectors leading the charge. The manufacturing sector, in particular, saw a robust growth of 7.5%, driven by increased demand, higher capacity utilization, and supportive government initiatives like the Production-Linked Incentive (PLI) scheme.
Services: The services sector, which accounts for the largest share of India’s GDP, grew by 9.8% in FY24. Key sub-sectors such as IT and ITES, financial services, and real estate witnessed strong performance, buoyed by digital transformation, increased financial inclusion, and a rebound in real estate activities.
Exports: Exports grew by 12.3% in FY24, driven by a recovery in global demand and competitive pricing of Indian goods. Key export sectors included pharmaceuticals, textiles, and engineering goods.
Consumption and Investment: Private consumption grew by 7.4%, supported by rising incomes and consumer confidence. Gross fixed capital formation, a measure of investment, grew by 10.2%, reflecting strong private sector investment and government infrastructure spending.
Quarterly Performance: Q4 FY24
The fourth quarter of FY24 saw a GDP growth of 7.8%, reflecting continued economic momentum. Here’s a breakdown of the quarterly performance:
Agriculture: The agricultural sector grew by 4.5% in Q4, slightly lower than the annual average but still robust. The Rabi harvest was strong, contributing to rural incomes and consumption.
Industry: The industrial sector grew by 7.1% in Q4, with manufacturing and construction leading the growth. Manufacturing grew by 6.8%, supported by festive season demand and increased production.
Services: The services sector maintained its strong performance with a 10.1% growth in Q4. IT and ITES continued to see high demand, while the financial sector benefited from increased credit uptake and digital banking services.
Exports: Quarterly export growth was 11.5%, driven by strong performance in key markets such as the US, EU, and Southeast Asia. Sectors like electronics, automotive components, and chemicals saw significant demand.
Consumption and Investment: Private consumption in Q4 grew by 6.9%, driven by festive season spending and urban demand recovery. Investment growth was strong at 9.8%, with continued infrastructure projects and private sector capex.
Gross Value Added (GVA) Insights
Gross Value Added (GVA) provides a comprehensive picture of the economic activity by measuring the value of goods and services produced in the economy. For FY24, the GVA at basic prices grew by 7.2%, driven by substantial contributions from various sectors. Agriculture, Forestry, and Fishing sectors grew by 4.1%, benefiting from a good monsoon and improved crop yields. The industrial sector experienced a growth of 8.3%, with significant contributions from manufacturing, mining, and construction. The services sector, a major contributor to the Indian economy, grew by 8.9%, led by robust performance in trade, hotels, transport, and communication.
Nominal GVA Figures
Nominal GVA, which includes the impact of inflation, also saw significant growth. For FY24, the Nominal GVA at basic prices stood at ₹ 267.62 lakh crore, reflecting an increase of 11.2% compared to the previous fiscal year. This growth highlights the economic expansion in monetary terms, factoring in price changes.
India's economic performance in FY24, with an 8.2% growth rate and a 7.8% rise in Q4 GDP, underscores the resilience and dynamism of its economy. The robust growth across agriculture, industry, and services sectors, along with strong domestic consumption, government spending, and export performance, highlights the nation's economic strength. The substantial increase in GVA and Nominal GVA figures further reflects the broad-based economic expansion. Sustaining this momentum will require addressing inflation, supply chain disruptions, and maintaining a stable investment climate. The positive trends indicate a promising outlook for India's economic future.
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