Capex a saving grace for India's GDP

India’s gross domestic product (GDP) print for the January-March quarter (Q4FY23) and FY23 sprang a positive surprise, despite headwinds.

- Rupali Sarkar

This has prompted many economists to revise their FY24 growth forecast upwards. Real GDP grew 7.2% in FY23, surpassing the government’s advance estimates as well as Reserve Bank of India’s (RBI) projection. However, this is also a moderation from the GDP growth of 9.1% seen in FY22.

In Q4, GDP growth rebounded to 6.1% year-on-year (y-o-y), after dipping to a three-quarter low of 4.5% y-o-y in Q3, led by a broad-based pick-up in consumption spending and investment (gross fixed capital formation) as well as an uptick in net exports led by a sharp decline in imports growth amid easing global commodity prices, particularly oil.

It is worth noting that gross value added (GVA) growth came in even higher at 6.5% y-o-y, led by a sharp rebound in industry and robust performance of agriculture and services sector. Difference between GDP and GVA is on account of net indirect taxes (or indirect taxes minus subsidies).