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Below the perspective on Indian GDP data by Mr Ashwini Kumar Shami, EVP and Portfolio Manager, Omniscience Capital

Latest GDP data indicates high growth rate potential for Indian Economy

"The real GDP growth for second quarter FY24 came at 7.6%, significantly ahead of RBI expectation of 6.5%. The half year (H1) FY 24 read GDP growth stands at 7.7%. Manufacturing activities took the lead in Q2 with industry segments such as Mining, Manufacturing, Utilities, and Constructions, each delivering double-digit growth in the range of 10% to 13.9%. Financial and other services, the largest contributor to the GDP had a slower growth at 6% compared to the last quarter (Q1) growth of 12.2%. India continues to grow at the fastest rate among all major economies.

"The US also reported strong Q3 2023 Real GDP growth at 5.2% yesterday. India and US GDP data points exhibit the fundamental strengths of the two economies and present a sharp contrast to the prevailing concerns about global macro uncertainties of economic slowdown due to inflationary and high interest rate scenarios in the developed economies and the regional political conflicts. We anticipate this strong economic growth to continue over the next many quarters with potential rate-cuts in the US and sustained focus on infrastructure investments in India.

The gross fixed capital formation expenditure at 14.7 lakh crore has seen a strong growth of 11% yoy in Q2 indicating strong capex investments. Given that the current government is close to the end of its 2nd consecutive term, it will make all efforts to achieve significant completed milestones to have a better chance to be reelected which will keep the focus on the multiple infrastructure investments underway. This clubbed with private sector capex growth indicates anticipated strong demand in the economy and ensures health future growth over several years."

Ashwini Kumar Shami, EVP and Portfolio Manager, Omniscience Capital

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