India GDP growth Q3 2024: India's economic growth in the third quarter of the fiscal year, spanning October to December, outstripped expectations, largely attributed to a substantial reduction in key subsidies, news agency Reuters reported, quoting government officials familiar with the matter.

Clocking in at 8.4 per cent, the country's GDP growth during this period marked its swiftest expansion in one-and-a-half years, significantly surpassing the 6.6 per cent forecasted by economists surveyed by Reuters.

However, the gross value added (GVA), a metric excluding indirect taxes and subsidies and serving as a gauge of total goods and services produced, registered a growth of 6.5 per cent. This discrepancy prompted economists to caution that the GDP figures might overstate actual growth trends.

A senior government official explained on Friday that the notable variance between GVA and GDP in the October-December quarter stemmed primarily from a steep decline in subsidies during this period, particularly owing to reduced payouts on fertiliser subsidies like Urea, the report said.

Data from the government revealed a nearly 70 per cent drop in fertiliser subsidies during the mentioned quarter, amounting to Rs 30,700 crore, compared to the corresponding period in the previous year.

This decline in subsidy payouts was attributed to the market cost of fertilisers witnessing a decrease in the current year, as elucidated by another senior government official, who spoke on the condition of anonymity.

Economists cautioned against interpreting the above-8 per cent real GDP growth figure without considering factors such as the significant disparity with GVA, a decline in agricultural activity, and an uneven economic growth pace, with investment far outpacing consumption.

Neelkanth Mishra, chief economist at Axis Bank, highlighted that the divergence between GDP and GVA reached a decade-high, although he anticipates this trend to revert, forecasting 6.5 per cent growth for the next financial year.

India's GDP growth is estimated at 7.6 per cent for the fiscal year ending March 31, 2024, with investment continuing to drive underlying growth, particularly fueled by government spending and residential real estate, while consumption remains subdued compared to the broader economy.

(With Reuters inputs.)