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Business News/ Economy / Q3 GDP data today: India's FY24 GDP pegged at 7.3%, H2FY24 growth to ease on lower capex, says NSE Report
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Q3 GDP data today: India's FY24 GDP pegged at 7.3%, H2FY24 growth to ease on lower capex, says NSE Report

According to the first advance estimate released by Centre for Statistical Office, India’s real GDP growth for FY24 has been pegged at 7.3 per cent—higher than market expectations and RBI’s estimate of seven per cent.

A view of Mumbai's financial district. (Image Credits: REUTERS/Danish Siddiqui/File Photo) (Reuters)Premium
A view of Mumbai's financial district. (Image Credits: REUTERS/Danish Siddiqui/File Photo) (Reuters)

India's gross domestic product (GDP) for the October-December quarter of fiscal 2023-24 (Q3FY24) will be released today (February 29) amid muted Street estimates by economists and brokerage firms, predicting a slowdown from the sharp 7.6 per cent growth logged in the preceding September quarter (Q2FY24).

GDP Q3 FY 24 Live Updates

In the current economic scenario, the Reserve Bank of India (RBI) has kept an actively disinflationary monetary policy stance aimed at supporting economic growth. The central bank's monetary policy committee (MPC) left the benchmark repo rate steady at 6.5 per cent for the sixth straight meeting this month and decided to focus on the withdrawal of accommodation.

RBI Governor Shaktikanta Das has reiterated that the policy imperative at the current juncture is to remain focused on achieving the four per cent inflation target on a durable basis, keeping in mind the objective of growth. 

Also Read: RBI MPC Minutes: Job on inflation front not over, ‘last mile’ of disinflation can be sticky; 5 key highlights


India FY24 GDP Growth estimates:

Meanwhile, leading investment banks and analytics agencies have released their respective forecasts for India's FY24 GDP growth. According to the first advance estimate released by Centre for Statistical Office (CSO), India’s real GDP growth for FY24 has been pegged at 7.3 per cent—higher than market expectations and RBI’s estimate of seven per cent. 

Real GDP growth pegged at 7.3 per cent for FY24: The gross fixed capital formation—proxy for investments in the economy, is expected to grow at a robust 10.3 per cent which will drive the GDP growth in the current fiscal.

On the other hand, the private consumption -constituting nearly 57 per cent of the real GDP, is expected to grow at a modest 4.4 per cent, lower than 7.5 per cent growth in the previous year, reflecting an uneven recovery and the impact of high inflation and El-Nino on rural demand.

The nominal GDP growth is estimated at 8.9 per cent, lower than 10.5 per cent assumed in the FY24 budget calculations. This was on account of deflation in wholesale prices for most part of the current fiscal, pulling the deflator down to 1.6 per cent for FY24.

Real GVA growth pegged at 6.9 per cent: On the supply side, the real gross value added (GVA) growth is pegged at 6.9 per cent in FY24, marginally lower than seven per cent in FY23, led by strong growth in industry and services, while agriculture is expected to feel the brunt of unfavourable climate conditions.

Also Read: India to become 3rd largest economy by 2027, market cap to hit $10 trillion by 2030: Jefferies


The impact of El-Nino, is evident in agricultural output that is expected to remain muted this year at 1.8 per cent year-on-year (YoY), down from four per cent growth in the previous year, according to January 2024' issue of NSE's ‘Market Pulse’ report.

Growth momentum to slow in H2FY24: The CSO’ FY24 estimate at 7.3 per cent implies a moderation in growth at seven per cent in the second half of FY24 -- lower than 7.7 per cent growth in H1FY24. That said, this is much higher than 6.25 per cent estimated by the RBI in the December policy, said the NSE report.

The robust growth in investments at 11 per cent in the second half is likely to be partly offset by subdued growth in government as well as private consumption. Concerns on growth looms largely through the consumption channel, emanating from tightened financial conditions and weakness in rural demand, according to NSE.

The International Monetary Fund (IMF) last month, upgraded India’s growth outlook on the back of better-than-expected resilience in its domestic demand. 

IMF now expects India’s GDP to grow by 6.7 per cent in FY24, 40 basis points higher than its previous forecast of 6.3 per cent given in the October 2023 update. One basis point is one-hundredth of a per cent.  
 

Q3FY24 GDP growth to ease below 7%: Street estimates

According to a recent research report by the State Bank of India (SBI), titled 'SBI Ecowrap', the Q3FY24 GDP growth is likely to be 6.8 per cent, assuming there are no changes to the base figures. However, there is potential to reach seven per cent in case of any downward revisions in the GDP growth figures for the year-ago period (Q3FY23). 

These revisions in the previous year's data could positively impact the current year's growth figures. Factoring the slight decline in economic activity in Q3 FY24, it estimates GDP should grow in the range of 6.7-6.9 per cent with a GVA growth of 6.6 per cent, said SBI in its Ecowrap report.

Street estimates also suggest that a 0.2 per cent contraction in the total spending of the central government and 25 state governments (all states except Arunachal Pradesh, Goa and Manipur) in Q3 FY2024 (+18.3 per cent in Q2 FY2024) is expected to have dulled the GVA growth in the quarter.

Also Read: India's GDP growth to ease in Q3 & Q4; Capex to remain tepid in run up to general elections: ICRA's Aditi Nayar

Speaking on Q3 GDP growth estimates, Vaibhav Shah, Fund Manager, Torus ORO PMS said, ‘’Based on the recent high frequency indicators and corporate commentary during earning season, we expect that GDP for Q3 may show some signs of deceleration.''

‘’Even MPC in their last meet signaled some deceleration compared to Q2 GDP data. However, we are confident that the overall real growth of seven per cent will be achieved leading to India becoming one of the fastest growing economy in the world,'' added Shah.

In a recent interview with LiveMint, Aditi Nayar, Chief Economist, Head- Research & Outreach at leading credit rating agency ICRA said that India's GDP growth will moderate to six per cent in Q3FY24 dragged by lower output of kharif crops and slowdown in the industrial sector. The economy will likely ease in Q4FY24 as well, according to the economist. 

Nayar added that the government capex is likely to remain tepid in the run-up to general elections in May 2024. ‘’We have projected the YoY growth of the GDP to ease to six per cent in Q3 FY2024 from 7.6 per cent in Q2 FY2024. Further, the GVA growth is estimated to moderate to six per cent in Q3 FY2024 from 7.4 per cent in Q2 FY2024, driven by the industrial and agriculture sectors, amidst an improvement in services,'' Nayar told LiveMint.

Owing to the decline in output across all major kharif crops projected by the first advance estimates, ICRA projects the agriculture, forestry, and fishing to dip to witness a sub-1 per cent growth in Q3 FY2024.

Besides, the anticipated deterioration in the industrial sector growth in Q3 FY2024 is partly attributable to an adverse base effect and a deceleration in volume expansion, even as the continued deflation in commodity prices kept profitability of some sectors favourable.

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ABOUT THE AUTHOR
Nikita Prasad
Nikita covers business news and has been producing news on digital platforms since 2018. She writes on economy, policy, markets, commodities, industry. Her core areas of interests include infrastructure, energy, oil and gas, railways, and transport/mobility. She has worked for business news channels like Moneycontrol, NDTV Profit, and Financial Express in the past. If you have story ideas/pitches/reports or quotes/views to share, reach her at nikita.prasad@htdigital.in.
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Published: 29 Feb 2024, 06:15 AM IST
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