Consumption Story To Play Second Fiddle To Investment-Led Growth

The annualized numbers show a Amritkaal phase for India especially with investments' underpinning the growth trajectory

Achala Jethmalani, Economist, RBL Bank

FinTech BizNews Service   

Mumbai, March 1, 2024: India’s Q3FY24 GDP growth figure of 8.4% year-on-year (YoY) show momentous growth was on the back of strong investment demand which further got a boost from a stupendous increase in valuables; even if one takes-away the change in last years’ figures. While the investment demand sustained, the consumption side of the story continues to remain less sanguine. The annualized numbers show a Amritkaal phase for India especially with investments’ underpinning the growth trajectory. The sequential figures show that it was only consumption spending of 9.5% quarter-on-quarter (QoQ) that led to a 4.5% QoQ. On the supply side, the GVA growth at 6.5% YoY is much more in sync with consensus estimates of 6.4% and RBL Bank estimate of 6.2%. On this metric, the agriculture output declined by 0.8% YoY while manufacturing output expanded nearly 12%. The governments’ CapEx plan for FY25, the recent announcement on bringing in fresh investments in defence and manufacturing sector is possibly paving the way for India’s increased manufacturing and investment led economic growth story. The consumption story is likely to play a second fiddle to India’s investment-led growth seen play out since Q1FY22. If such high growth rates were to persist, India would further outshine on its ‘fastest’ growing economy tag ,especially at a time when global growth is trending down.

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