India reported surprisingly robust economic growth. Gross domestic product (GDP) rose 8.4% in the last three months of 2023 versus a year earlier. Between June and September, the economy grew by 7.6%. This is evidenced by data from the Indian Statistical Office, writes Liga.net.
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According to Tamasha De Silva from Capital Economics, “these growth rates were the highest among major economies in the last quarter.”
India's GDP growth was much stronger than analysts expected. It is based on data distortions that experts say are masking the economic slowdown.
Economists said the main reason for the increase was an unexpected reduction in government subsidies, which led to an artificial increase in the category of net indirect taxes used to calculate GDP, Bloomberg writes.
A more representative measure of economic activity that excludes these one-time items rose by 6.5%, growth was in line with expectations and showed a slowdown compared to the previous quarter.
“Not all that glitters is growth. Core growth is weaker than the headline suggests,” Japanese financial holding Nomura commented on the Indian government’s statement.
According to its data, consumption in the country continues to lag, and the agricultural sector, which accounts for 16% of India’s GDP and is the main source of employment , shows poor results.
The unexpected data comes just weeks before elections are held in India, and Prime Minister Narendra Modi seeks to extend his decade in power, the agency notes.
The government also raised its growth forecast for the current fiscal year to March from 7.3% to 7.6%. This will allow India to become the world's fastest-growing economy, especially as China's recovery from the pandemic has slowed.
Jefferies analysts expect the country to become the world's third-largest economy by 2027, up from the fifth-largest now, CNN reports .
India is widely seen as an alternative to China for countries and companies seeking to diversify their supply chains, especially amid worsening relations between Washington and Beijing.
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