India beats expectations as Q3 GDP growth surges to 8.4%
India’s gross domestic product expanded 8.4% in the October to December quarter of 2023, driven by buoyant manufacturing and construction.
The government also revised up its GDP growth forecast for the year ending in March 2024 to 7.6%, from its January projection of 7.3%.
The figure for the quarter ended December, India’s third fiscal term, beat economists’ expectations, who had predicted an average of 6.6% growth in a poll of economists by Reuters.
The third-quarter GDP figure was the highest in six quarters, on the back of an 11.6% rise in manufacturing activity and a 9.5% expansion of the construction sector, the government said in a statement.
The previous two quarters’ GDP growth rates were also revised up to 8.2% for April-June, from 7.8%, and to 8.1% for July-September, from 7.6%.
“Robust 8.4% GDP growth in Q3 2023-24 shows the strength of Indian economy and its potential,” Prime Minister Narendra Modi posted on X (formerly Twitter). “Our efforts will continue to bring fast economic growth which shall help Indians lead a better life.”
Early in February, the government presented an interim budget that sought to slow the pace of infrastructure growth while aiming for fiscal consolidation.
Under the plan, capital expenditure is set for an annual rise of about 11% to a record 11.11 trillion rupees ($133.98 billion) for the year ending March 2025. That is down from a 33% surge in the current year’s budget.
“We remain the fastest growing major economy,” said N. R. Bhanumurthy, vice chancellor of the Bengaluru-based Dr. B.R. Ambedkar School of Economics University, adding that there is also a possibility that the full fiscal year growth estimates might be revised up from the current 7.6%.
India accounts for 46% of world’s digital payments
Digital payments in India have recorded a 90-fold increase in the past 12 years, Reserve Bank of India governor Shaktikanta Das has said.
This represents 46% of the world’s digital transactions, reflected in the Reserve Bank’s Digital Payment Index, which has seen a four-fold rise in the past five years.
“The retail digital payments in India growing from 1.62 billion transactions in 2012-13 to over 147.26 billion transactions in 2023-24. The flagship of our payment systems, the UPI, has become the most talked about fast payment system not only in India but across the world,” Das said at the recent Digital Payments Awareness Week event.
The RBI chief said Unified Payments Interface (UPI) was the biggest contributor to the growth of the digital payments ecosystem, with its share of the homegrown payment platform in digital payments hitting almost to 80% in 2023.
The central bank chief said that the volume of UPI transactions has increased from 430 million in 2017 to 117.61 billion in 2023. He said it took 1,668 days for the first 10 billion Person-to-Merchant transactions, whereas the latest 10 billion milestone took just 45 days. Person-to-person transactions took 1,329 days to reach the first-ever 10 billion mark, while taking just 65 days for the latest 10 billion transactions.
Nevertheless, Das argued that there is significant scope for improvement in the digital payment ecosystem.
Through the ‘Har Payment Digital’ Mission the RBI is aiming to make every Indian adopt digital payments, he said. “Since the start of the mission in March 2023, 66.5 million new UPI users have been added up to 31 January 2024.”
The central bank governor said the Payments Infrastructure Development Fund aided this growth.
This fund, created in January 2021 and extended up to December 2025, aims to increase the number of devices that accept digital payments in smaller cities and towns, strengthening India’s digital payments system.
