India’s GDP growth likely picked up in Q4 (Jan–Mar) as per Reuters poll

India’s GDP Growth Likely Accelerated in Q4 (Jan–Mar) 2024 on Strong Rural Spending: Reuters Poll

New Delhi, India (May 2024) — India’s economic growth likely picked up pace in the January–March quarter (Q4 of FY24), buoyed by robust rural spending and resilient domestic demand, according to a recent Reuters poll cited by Business Standard. This anticipated acceleration comes after the country recorded steady expansion in the preceding quarters, underlining the strength of Asia’s third-largest economy despite global uncertainties.

Growth Expected to Rebound in Q4

A Reuters poll of leading economists suggests that India’s Gross Domestic Product (GDP) growth rate for the fourth quarter of the financial year is likely to outpace the previous quarter’s performance. The key driver behind this expected increase has been identified as strong rural spending, which, according to analysts, boosted consumption and supported broad-based growth across several sectors.

Official data released earlier showed India’s GDP expanded by 6.2% year-on-year in the October–December period (Q3 of FY24), as reported by BusinessLine. The Q4 figures, expected to be released soon by the government, are projected to show an improved performance, reflecting better rural incomes and ongoing public capital expenditure.

Rural Spending and Domestic Demand

Economic observers point to rural India as an important engine of growth in recent months. Improved monsoon rains, increased government transfers, and a focus on infrastructure and welfare schemes have contributed to higher disposable incomes in the hinterland. This, in turn, has led to a pickup in demand for consumer goods, agricultural inputs, and services in rural regions.

According to the Reuters poll, strong farm output and robust rural demand helped offset headwinds from global economic uncertainties and subdued exports. The poll also highlighted that continued public investment and relatively stable inflation have supported domestic consumption, further aiding overall economic momentum.

Moderation Expected in the Current Financial Year

While the January–March quarter is expected to show improving numbers, forecasts for the ongoing financial year 2024–25 (FY25) point to a moderation in GDP growth. The Indian government has projected economic growth at 6.4% for FY25, the slowest pace in four years, according to a recent Reuters report. Factors such as a high base effect, tighter global financial conditions, and potential volatility in external demand underpin this forecast.

However, some government officials remain optimistic about growth prospects. The Chief Economic Adviser has indicated that events like the Maha Kumbh, a major religious gathering scheduled for FY25, could provide an additional boost to economic activity, potentially helping India achieve growth rates closer to 6.5%, The Economic Times reports.

Policy Developments and Broader Outlook

Meanwhile, the Reserve Bank of India (RBI) is contemplating new ways to support economic expansion, including seeking approval for overseas rupee lending to neighboring countries, according to Business Standard. Such measures are aimed at facilitating trade, supporting regional economies, and enhancing the rupee’s international profile.

India’s ongoing growth story is characterized by a strong domestic market, resilient consumer demand, and ongoing public investments. The anticipated pickup in Q4 GDP growth highlights the potential for continued expansion, even as forecasts suggest a measured pace in the coming year.

With official Q4 GDP numbers set to be published soon, analysts and policymakers alike will be closely watching for signs of sustained momentum and the impact of rural spending on India’s economic trajectory in 2024 and beyond.