SBI report deciphers India's GDP surge and economic projections

In a research report titled "When 8 per cent becomes the new normal: Decoding the new normals of a GDP on swing," the State Bank of India's Economic Research Department unveils key insights into India's economic landscape, shedding light on the recent GDP surge and providing projections for the future.

The report highlights the unprecedented growth witnessed in India's economy during the third quarter of FY24, defying all estimates and expectations.

India's GDP expanded by a remarkable 8.4 per cent during this period, following consecutive quarters of over 8 per cent growth.

This surge has been attributed to effective policy frameworks and perspectives, which have surpassed irrational market expectations.

The buoyancy in indirect tax collection, marked by a 32 per cent year-on-year growth amounting to Rs 3.9 lakh crore, further underlines the robustness of the economy.

As a result, projections for FY24 indicate a GDP growth of 7.6 per cent and Gross Value Added (GVA) growth of 6.9 per cent.

The report suggests that the GDP growth for the fourth quarter could be around 5.9 per cent, indicating a potential attainment of 8 per cent growth for the fiscal year.

Significant revisions in both annual and quarterly numbers have led to upward adjustments in the GDP figures for FY22 and FY24.

This revision has propelled the Year-to-Date (YTD) GDP growth rate above the 8 per cent mark. However, downward revisions in FY23 GDP numbers have implications for the fiscal deficit, necessitating an upward revision to 5.9 per cent of GDP for FY24.

Delving into sectoral performances, the report highlights stellar performances in Manufacturing and Services, buoyed by significant growth in industry, manufacturing, and construction sectors.

However, the agriculture sector witnessed a decline of -0.8 per cent in Q3, attributed to uncontrollable factors.

Moreover, the report underscores remarkable milestones achieved in terms of per capita GDP, with current prices crossing the Rs 2 lakh mark in FY24.

Decadal Compound Annual Growth Rate (CAGR) stands at 8.9 per cent, with notable increases observed even in constant prices. Notably, post-pandemic recovery has seen a substantial jump in per capita GDP.

The report also analyzes investment and savings trends over the past decade, revealing an increase in Gross Capital Formation (GCF) and gross savings.

Noteworthy is the improvement in the Incremental Capital Output ratio (ICOR), indicating increasing efficiency of capital utilization and laying the groundwork for sustained economic growth.

In conclusion, the findings of the SBI report suggest a promising outlook for India's economy, with the potential for sustained growth at 8 per cent in FY25.