Q2FY24 GDP surprised on the upside

Led by healthy year-on-year (Y-o-Y) as well as sequential pickup in manufacturing, construction and majority of the services, India's real GDP growth in Q2, FY24 at 7.6 per cent (Y-0-Y) was much higher-thananticipated.

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However, the contribution of a favourable statistical base for mining & manufacturing sectors cannot be underplayed. Both these sectors had posted negative growth rates in Q2FY23.

From the expenditure side, the real push to growth continued to come from the capital formation (fixed investment) than consumption spending during the first half of the current financial year. As revealed by the fiscal statistics, India's Central Government had frontloaded the capital spending and spent 4.90 trillion on capital formation during H1FY24, or 49 per cent of the budgeted target. This is reflected in an improved share of gross fixed capital formation (GFCF) in GDP from 34.4 per cent in H1FY23 to 35 per cent in H1FY24.

This was also seen in the robust growth of 12.2 per cent (Y-o-Y) in infrastructure/construction goods in the industrial production statistics for AprilSeptember, 2023.