March 01, 2024 (MLN): India’s Gross Domestic Product (GDP) grew 8.4% YoY in the last quarter of 2023, compared to 8.1% in the previous quarter and beating estimates of 6.6%, data released by Ministry of Statistics and Programme Implementation showed on Thursday.
This was the strongest GDP growth since 2QCY22.
GDP at Constant (2011-12) Prices in 4QCY24 is estimated at INR 43.72 trillion, against INR 40.35tr in the same quarter of last year, said a press release issued Thursday.
Analysts pointed to a surge in taxes as a possible reason for the unexpected jump in GDP, as Bloomberg reported.
The ministry’s figures for gross value added, which is GDP plus subsidies, minus taxes, showed a slowdown to 6.5% in the fourth quarter from a revised 7.7% in the previous three months.
Madhavi Arora, an economist with Emkay Financial Services, said the sharp divergence between the two metrics was “difficult to fathom.” She said it likely reflects higher growth in general government net indirect taxes, possibly with lower subsidies.
Economists cautioned against placing too much optimism on the GDP number, saying GVA growth was a better measure of underlying momentum in the economy.
Financial markets, though, were upbeat following the data, with the benchmark Sensex index advancing as much as 0.9%. The rupee gained.
The divergence sets up a debate over whether the Reserve Bank of India will stay on guard as it tries to bring inflation down to its 4% target.
The central bank has kept interest rates unchanged and stuck to a relatively hawkish policy stance for several months, although some policy committee members argue that keeping borrowing costs too high could stifle economic growth.
