Indian economy expanded by 8.4% in final three months of 2023

March 1 (UPI) -- A boom in manufacturing helped India's economy surge in the fourth quarter with annual GDP up 8.4% compared with the same period in 2022, as the world's fastest-growing economy eyes its nearest rivals, Japan and Germany, new figures show.

The performance, up from 7.6% in the June-to-September period, was also boosted by a double-digit surge in investment, construction up 9.5% and strong growth in agri-business sector contracts, the Statistics Ministry said Thursday in a news release.

The National Statistical Office also upped its growth estimate for full-year 2023, which ends March 31, by 0.3% to 7.6%. That forecast is substantially higher than that of the International Monetary Fund which said in its latest World Economic Outlook in January that it expected the Indian economy to grow by 6.7% in 2023 and 6.5% in 2024.

Private consumption, which makes up almost two-thirds of the economy rose by a more modest 3.5%.

Nevertheless, the robust economic figures will come as a welcome boost to the BJP government of Prime Minister Narendra Modi ahead of an upcoming general election set for April or May.

Modi hailed the growth report saying it was an endorsement of his government's economic record.

"Robust 8.4% GDP growth in the October to December period shows the strength of the Indian economy and its potential," he said in a post on X.

"Our efforts will continue to bring fast economic growth to help 1.4 billion Indians lead a better life and create a developed India."

The growth figures were published as the government Thursday approved the construction of $15.2 billion worth of new semiconductor plants, including one by homegrown conglomerate giant, Tata Group, as part of a drive to grab a share of a global chip market dominated by China and Taiwan.

Economists warned the economic data needed to be viewed with circumspection with Japan's Nomura investment bank telling clients in a note Friday that "underlying growth is weaker" than the headline numbers indicated.

"All that glitters is not gold," it said.

However, other analysts argued that while the pace of growth might be temporarily impacted by global economic weakness hitting Indian exports and lower consumer spending, the overall outlook remained buoyant.

"Any slowdown in growth will be mild, particularly as the government's infrastructure drive is likely to prop up activity," said Thamashi De Silva, assistant India economist at Capital Economics in London.