The GDP data for the latest October-December 2023 quarter is set to be released at 5:30 pm on Thursday, February 29. The quarter witnessed a slowdown in government expenditure and an uneven monsoon. Therefore, analysts expect a slower GDP growth of between 6 per cent and 7 per cent for Q3 FY24, compared with 7.6 per cent in the preceding quarter (Q2 FY24).
Rating agency Icra expects India’s GDP to grow 6 per cent in Q3FY24, State Bank of India (SBI) sees a 6.8-7 per cent growth, and the RBI sees the country’s GDP growth at 6.5 per cent in the October-December 2023 quarter. Here’s what you need to watch out for in the latest GDP numbers:
Consumption
Private final consumption expenditure is the largest component accounting for 60 per cent of the GDP. Its movement has a huge weightage on the entire GDP number.
In the preceding quarter ended September 2023, private final consumption expenditure (PFCE) and government final consumption expenditure (GFCE) grew 3.13 per cent and 12.35 per cent, respectively, y-o-y.
Investment and Infrastructure
Gross fixed capital formation (GFCF) is an indicator of investment activity in the country. A growth in GFCF indicates a jump in investment in the country.
“The momentum in India’s investment activity moderated in Q3 FY2024, with an easing in the YoY growth of nine of the 11 investment-related indicators, relative to Q2 FY2024. For instance, the capital outlay and net lending of 25 state governments shrank by 3.9 per cent on a YoY basis, after having surged by 42.4 per cent in Q2 FY2024,” ICRA said in a report.
Agriculture Growth
Agriculture is the sector that remained resilient during the pandemic period. It provided positive growth when all other sectors posted negative growth during the lockdown.
However, as the year 2023 is an El Nino year causing shortfall in rains, the Q3 FY24 might see a drop in growth in gross value added (GVA).
Owing to the decline in output across all major kharif crops projected by the First Advance Estimates, ICRA projects the growth in agriculture, forestry, and fishing to dip to a muted 0.5 per cent in Q3 FY2024 from 1.2 per cent in Q2 FY2024. This would be the lowest growth print for the sector since Q4 FY2019 (-0.9 per cent).
Manufacturing Growth/ Industrial Sector
Manufacturing growth was hit majorly first during the coronavirus pandemic and then due to the Russia-Ukraine war that led to supply disruptions, which increased commodity prices and thus input costs for companies.
ICRA expects industrial growth at 8.8 per cent for Q3 FY24, compared with 13.2 per cent in the preceding quarter.
Services Sector Growth
In contrast to industry and agriculture, ICRA estimates the services GVA YoY growth to rise to 6.5 per cent in Q3 FY2024 from 5.8 per cent in Q2 FY2024, led by trade, hotels, transport, communication and services related to broadcasting (to +8.0 per cent from +4.3 per cent).
In the preceding quarter ended September 2023 (Q2 FY24), India’s GDP had grown 7.6 per cent y-o-y. The Q3 FY24 GDP growth was more than what was expected by analysts.
Comments
0 comment