Domestic demand conditions remain supportive of growth, the Governor said. Rural demand is growing while urban demand remains resilient, he added.
In the run-up to the MPC’s latest meeting, leading forecasters had projected the numbers in the range of 5.5% to 6.3% — OECD saw FY24 real GDP at 6%, the World Bank at 6.3%, JP Morgan at 5.5% and UBS at 6.2%.
The MPC, at its meeting, unanimously decided to keep the policy rate unchanged at 6.5 per cent, Das announced. It was a status quo at the previous (April) policy meet too.
The committee also decided to focus on withdrawal of accommodative, with a 5-1 vote in favour of this stance, Das informed.
The MPC in its February meeting had pegged real GDP growth for FY24 at 6.4%. The first advance estimate pegged FY23 GDP growth at 7%.The Indian economy had clocked Q4 GDP print of 6.1% in March quarter (Q4). This stronger-than-expected performance lifted India’s growth to 7.2% in FY23. It exceeded the 7% growth cited in the second advance estimates released in February.In Q4, GDP growth also increased sequentially from the (revised) 4.5% in the comparable quarter last year. The stellar performance helped India retain its status as the fastest-growing major economy in the world.
The economy had grown 9.1% in FY22. That, however, was on a lower base of a Covid-ravaged FY21. The strong growth makes India the fastest-growing major economy again.
In terms of nominal growth, GDP rose 16.1% in FY23 as against with 18.4% expansion in the preceding year.
A look back at key points of Q4’s stellar show
Manufacturing GVA went up 4.5% in Q4 from a year earlier, overturning two quarters of negative growth.
Government’s capex pushed gross fixed capital formation up by 8.9% in Q4, raising its share in GDP to an all-time high of 35.3%. Private consumption, however, remained sluggish with a 2.9% growth.
For full FY23, gross fixed capital formation rose 11.4%, raising its share in GDP to 34%, the highest since FY15.
Overall, GVA grew 6.5% in Q4 compared with 4.7% in the preceding one with construction leading the output surge at 10.4% followed by the trade, hotel, and transport segment at 9.1% and the financial sector at 7.1%.
Farm sector output was 5.5% in the quarter, the highest in three years.