India’s GDP in Q4 FY24 moderated, less than expected, posting an annualized growth of 7.8%. The full year translates to a stellar 8.2% FY24 GDP growth vs 7.0% in FY23
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GDP in FY24 has been amplified by a robust growth in NIT (i.e., Net Indirect Taxes, as tax collections soared while subsidy payouts declined on an annualized basis). The true gauge of economic activity – i.e., GVA growth stood at 7.2% in FY24 (100 bps below GDP). In fact, Q4 GVA growth at 6.3% was close to our estimate (of 6.1%) and captures the moderation in pace of economic activity in every subsequent quarter of FY24.
While we continue to expect the underlying strength in investment theme to continue into FY25, we do see plethora of pulls and pressures manifesting at a granular level. While Agri growth will bounce-back amidst ‘above normal’ monsoon forecast, manufacturing may well maintain its volume momentum, but higher input costs will impinge on value added growth in the sector. Net exports, could impart a slower drag on growth, but much depends on evolving geopolitics. We stick to our call of FY25 GDP growth of 6.8%. and GVA growth pegged at 6.6%.