The GDP development within the third quarter ended December 2023 (Q3 FY2024), the official knowledge of which is about to be launched on Thursday, February 29, is probably going to reasonable to 6 per cent 12 months-on-12 months (y-o-y), towards 7.6 per cent in Q2 FY2024, in accordance to a report by ranking company ICRA.
Further, the GVA development is estimated to ease to 6 per cent in Q3 FY2024 from 7.4 per cent in Q2 FY2024, pushed by the economic (to +8.8 per cent from +13.2 per cent) and agriculture (to +0.5 per cent from +1.2 per cent) sectors, amidst an enchancment in providers (to +6.5 per cent from +5.8 per cent), in accordance to the ICRA report.
“The anticipated deterioration in the industrial sector growth in Q3 FY2024 is partly attributable to an adverse base effect (+2.3 per cent in Q3 FY2023 as against -0.5 per cent in Q2 FY2023) and a deceleration in volume expansion (IIP growth of 5.8 per cent in Q3 FY2024 vs. 7.8 per cent in Q2 FY2024), even as the continued deflation in commodity prices kept profitability of some sectors favourable,” ICRA mentioned.
Additionally, a light 0.2 per cent contraction within the complete spending of the Government of India and 25 state governments (all states besides Arunachal Pradesh, Goa and Manipur) in Q3 FY2024 (+18.3 per cent in Q2 FY2024) is anticipated to have dulled the GVA development within the quarter, the ICRA report added.
Aditi Nayar, chief economist and head (analysis & outreach) at ICRA Ltd, mentioned, “Lower volume growth for the industrial sector, flagging momentum in certain indicators of investment activity, a slowdown in government expenditure and an uneven monsoon are expected to dampen the GDP growth to 6 per cent in Q3 FY2024 from 7.6 per cent in Q2 FY2024.”
ICRA estimates the economic GVA development to report a broad-primarily based moderation to 8.8 per cent in Q3 FY2024 from 13.2 per cent in Q2 FY2024, led by all 4 sub-sectors, particularly, manufacturing (to +10 per cent from +13.9 per cent), electrical energy (to +8 per cent from +10.1 per cent), building (to +7 per cent from +13.3 per cent), and mining and quarrying (to +7 per cent from +10 per cent).
ICRA tasks manufacturing GVA enlargement at a wholesome 10 per cent in Q3 FY2024, twice as excessive because the 4.7 per cent seen in Q1 FY2024, albeit decrease than the 13.9 per cent recorded in Q2 FY2024, amid a deceleration in quantity development as mirrored within the manufacturing IIP.
“The YoY growth in electricity generation tempered in Q3 FY2024 owing to moderation in demand (to +9.4 per cent from +11.7 per cent, respectively) with the onset of the winter season. Moreover, the pace of construction activity is anticipated to have slackened in Q3 FY2024 relative to Q2 FY2024, with the YoY growth in production of cement (to +4.5 per cent from +10.4 per cent), and steel (to +8.6 per cent from +15.4 per cent) witnessing a deterioration,” the report mentioned.
The momentum in India’s funding exercise moderated in Q3 FY2024, with an easing within the YoY development of 9 of the 11 funding-associated indicators, relative to Q2 FY2024. For occasion, the capital outlay and internet lending of 25 state governments shrank by 3.9 per cent on a YoY foundation, after having surged by 42.4 per cent in Q2 FY2024.
“Further, the YoY expansion in the Government of India’s (GoI’s) gross capex dipped slightly to 24.4% in Q3 FY2024 (-9.4% in Q3 FY2023) from 26.4% in Q2 FY2024 (+42.4% in Q2 FY2023), despite a low base. Other indicators reporting a slowdown in growth in this period include engineering goods imports, infra/construction goods output and CV registrations,” the ICRA report mentioned.
Owing to the decline in output throughout all main kharif crops projected by the First Advance Estimates, ICRA tasks the expansion 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 can be the bottom development print for the sector since This autumn FY2019 (-0.9 per cent).
In distinction to trade and agriculture, ICRA estimates the providers GVA YoY development to rise to 6.5 per cent in Q3 FY2024 from 5.8 per cent in Q2 FY2024, led by commerce, lodges, transport, communication and providers associated to broadcasting (to +8.0 per cent from +4.3 per cent).
“Several high-frequency indicators related to this sub-sector displayed an improvement in their YoY growth in Q3 FY2024 relative to the previous quarter. This sub-set includes air cargo traffic, ports cargo traffic, GST e-way bills, railway freight, services exports, and the number of telephone subscribers,” ICRA mentioned.
