GDP components likely to outperform

In the first quarter (Q1) of FY2024, India's economic activity showed an expected acceleration, with GDP growth in constant terms rising to 7.8 percent from 6.1 percent in the previous quarter, Q4 FY2023. This growth, while in line with consensus expectations, trailed the estimates of some experts. However, a closer look at the data reveals concerns about net exports, which may be underestimated in the official figures.

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According to data from the National Statistical Office (NSO), India's net exports (goods and services) deteriorated to -2.3 percent of GDP (at current prices) in Q1 FY2024, compared to -1.6 percent in Q4 FY2023. However, these figures are likely to be underestimated, and the actual drag on GDP from net exports may have been more significant.

The NSO uses merchandise trade data from the Ministry of Commerce and Industry and provisional monthly services trade data from the Reserve Bank of India (RBI) to calculate aggregate trade numbers for the latest quarter. These figures are later revised to incorporate Balance of Payments (BOP) data, which is typically released about a month after the GDP data for the quarter. Historical trends in net exports from the revised NSO data and BOP data have shown mild differences, typically below 0.1 percentage points as a proportion of GDP at current prices.