India Ratings and Research sees India’s GDP growth rate for the March quarter to come at 6.7 percent and around 6.9-7 percent for the fiscal year 2023-24, said principal economist Sunil Kumar Sinha.
The GDP figures for the fourth quarter (January-March 2024) and the provisional estimates for fiscal 24 are slated to be published by the government on May 31.
The Indian economy expanded 8.2 percent in the first quarter, followed by 8.1 percent and 8.4 percent in the subsequent second and third quarters of 2023-24.
“We are expecting the fourth quarter growth to be 6.7 percent and the overall GDP growth for FY24 to be around 6.9-7 percent,” reported PTI Videos quoting Sinha.
The GDP figures in the first two quarters got support from a low base, though the 8.4 percent growth rate in the December 2023 ending quarter came as a surprise.
“When we analyze the data, then what is visible is the wedge between the GVA and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter. The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter,” he noted.
The gross value added (GVA), which is GDP less net taxes (gross tax collection minus subsidy), stood at 6.5 percent in the third quarter, with GDP growth coming at 8.4 percent. This wedge is due to higher taxes collected during the quarter.
The GVA and GDP growth in the first quarter was 8.2 percent, followed by GVA at 7.7 percent and GDP at 8.1 percent in the subsequent quarter.
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The Reserve Bank’s monetary policy review in April gave a 2023-24 outlook at 7 percent. Ind-RA sees the economy to expand at 7.1 percent for the full fiscal of 2024.
“Even if we set aside the tax component, the momentum witnessed in the first and second quarters has continued in the subsequent quarters, and the likelihood is that momentum will continue in FY25,” he added.
The services sector would continue to see momentum, with construction and electricity continuing to peddle forward while mining and industrial output would be laggards.
“The prediction of above normal monsoon (by the Indian Meteorological Department), if it turns out to be true, will see some revival in rural demand, which will support consumption demand, and make it broad-based, instead of skewed currently,” Sinha said.