India's Economy Surges: GDP Grows 7.4% in Q4, Full-Year Growth Hits 6.5% Despite Global Headwinds

India's economy showed unexpected strength in the final quarter of FY2023-24, registering 7.4% GDP growth, driven by robust performances in manufacturing, construction, and government capital spending. According to data released by the Ministry of Statistics and Programme Implementation (MoSPI), the country’s full-year GDP growth stands at 6.5%, reaffirming its position as one of the fastest-growing major economies globally.

Access the official GDP press release from MoSPI here: mospi.gov.in

Sector-Wise Growth Analysis: Manufacturing and Construction Lead

The manufacturing sector rebounded with 8.9% growth in Q4, recovering from earlier softness attributed to global demand shocks. The construction sector continued to be a pillar of strength, expanding by 10.2%, fueled by government-led infrastructure projects.

Other Highlights:

• Agriculture remained sluggish, growing at only 1.9%, impacted by erratic monsoons.

• Financial and real estate services grew by 6.2%, reflecting stability in banking and credit flows.

• Trade, hotels, transport, and communication services posted a healthy 6.8% growth, thanks to post-pandemic normalization.

For detailed sectoral breakdowns, visit RBI’s quarterly economic bulletin.

Fiscal Measures and Government Spending Played Key Role

Experts attribute much of the Q4 momentum to frontloaded government capital expenditure, with total government capex reaching ₹10.8 lakh crore for FY24, a 28% increase over the previous year. The emphasis on transport infrastructure, digital public goods, and rural development has had significant multiplier effects across sectors.

Read the Union Budget 2024-25 highlights here: indiabudget.gov.in

Notably, the PLI (Production-Linked Incentive) schemes in electronics, solar, and pharmaceuticals have contributed to a jump in manufacturing output, with exports of goods showing moderate resilience despite a global slowdown.

External Factors: Global Slowdown, Oil Prices, and Monetary Policy

Despite global uncertainties such as tightening by major central banks and high oil prices, India’s economy has largely defied fears of stagnation. The RBI’s cautious approach to interest rates and strong domestic demand have helped maintain macroeconomic stability.

• Retail inflation remained within the RBI’s comfort zone at 4.83% in April 2024.

• Forex reserves touched $648 billion, giving a buffer against external shocks.

• Trade deficit narrowed in Q4, aided by stable oil imports and strong service exports, especially in IT and consulting.

For updated trade and macroeconomic data, refer to Ministry of Commerce and Industry reports.

Expert Views: Optimism With Caution

Economists are largely optimistic but caution that sustaining 6.5%+ growth will require resolving structural bottlenecks such as:

• Job creation in rural and informal sectors

• Improving agricultural productivity

• Boosting private investments, which still lag behind public capex

According to Dr. Rajiv Kumar, former Vice-Chairman of NITI Aayog, “The private sector is showing signs of revival, but consistency in policy and judicial reform are key to maintaining investor confidence.”

Read more from NITI Aayog's economic outlook publications at niti.gov.in.

Global Confidence in India’s Growth Story

India’s strong GDP numbers have drawn attention from international institutions and investors:

• The IMF has revised India’s growth forecast upward to 6.8% for FY2025.

• S&P Global and Moody’s cited robust domestic demand and structural reforms as reasons for positive outlooks.

• Foreign direct investment (FDI) flows remained steady, with notable inflows in tech, EV manufacturing, and fintech sectors.

Access the latest IMF India report here.

Stock Market and Rupee Reaction

Following the GDP announcement:

• The BSE Sensex rallied over 500 points.

• The Indian rupee appreciated slightly against the dollar, closing at ₹82.17/USD, supported by strong macroeconomic indicators.

For real-time market updates, visit Moneycontrol or NSE India.

Outlook for FY2024-25: Positive Momentum with Policy Focus

Looking ahead, the economic outlook for India remains cautiously optimistic:

• Monsoon predictions are favorable, which may lift rural incomes.

• Upcoming general elections could spur short-term public spending.

• Global demand, especially from the US and Europe, will influence export sectors.

The Reserve Bank of India is expected to maintain a balanced monetary stance, focusing on inflation control without disrupting growth.

Read RBI's monetary policy statements here.

Conclusion: India Holds Its Ground in a Turbulent Global Economy

India’s Q4 GDP growth of 7.4% and full-year expansion of 6.5% marks a strong finish to FY2024, especially amid global economic volatility. Strategic public investment, stable macroeconomic management, and a gradual recovery in private sector confidence have helped the country weather external storms.

With structural reforms continuing and global investors keeping a close eye, India is well-positioned to be a leading engine of global economic growth in the coming decade — provided it addresses its domestic challenges with the same vigor.