Rating agency ICRA has pegged India’s gross domestic product (GDP) growth at 13 percent year-on-year (YoY) in the April-June quarter of the financial year 2022-23 (Q1FY23), while the State Bank of India, in its research report, SBI Ecowrap, predicts the GDP to go upward at 15.7 percent on- year.
These predictions show a sharp rise from the 4.1 percent growth recorded in Q4FY22. However, these forecasts remain lower than the Reserve Bank of India’s projection of 16.2 percent GDP growth in Q1.
For the whole fiscal, SBI sees a GDP growth rate of 7.5 percent, up 30 basis points from the RBI’s projection of 7.2 percent.
“If this materializes, we expect an upside to RBI GDP projections at 7.2 percent for FY23. The significantly high base of FY22 and the low base of FY21 has made the forecasting exercise a difficult one, with a large band around the mean estimates,” it said.
Gross value added (GVA) in agriculture, forestry and fishing is expected to contract by 1 percent in Q1, against the growth of 4.1 percent in Q4FY22, as the heat wave impacted the agricultural ecosystem in several parts of the country, which hampered wheat output, ICRA said.
ICRA says a 17-19 percent growth in the services sector can be registered for Q1, up from 5.5 percent reported in the last quarter, on the back of a shift to contact-intensive services from discretionary consumer goods.
The recent moderation in commodity prices,” ICRA chief economist Aditi Nayar added, “if sustained, should help ease inflationary as well as margin pressures and translate into improved demand for discretionary goods and higher value-added growth, respectively”.
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The industrial sector is expected to grow 9-11 percent in Q1 against 1.3 percent in Q4. Private final consumption expenditure in real terms could see a significant growth, showcasing a robust recovery in consumer demand.
The challenge of tepid export demand, and the impact of high commodity prices on volumes and margins for the industrial sector, is likely to result in relatively moderate industrial growth, Nayar said.
Notably, the FMCG sector is predicted to witness sombre growth due to persisitent increased retail inflation recorded in Q1. Customers might think twice before any discretionary spending if the price hike remain consistent. Also, on the other side, the companies posting revenue growth in Q1 was mainly by value and not volumes.
The central bank predicts the real GDP growth projection for 2022-23 at 7.2 percent, with 16.2 percent in Q1; 6.2 percent in Q2; 4.1 percent in Q3; and 4.0 percent in Q4, and risks broadly balanced.