The Indian economy is expected to hold up well in Q2FY24 with GDP growth print in the range of 6.8- 7 per cent during the July-September quarter, said economists. India had recorded Q1 GDP data at 7.8 per cent, which was followed by 6.1 per cent in the previous January-March quarter of FY23. Deepak Jasani, Head Retail Research at HDFC Securities, said, “India’s GDP for Q2FY24 will likely be in the 6.8- 7 per cent band (vs 7.8 per cent in Q1FY24) due to normalising base, erratic monsoon (though having benevolent impact on some sectors like mining), rural economic challenges, delays in festive activities and a deceleration in government capital expenditure. However, this number will still be higher than the RBI MPC forecast of 6.5 per cent.” Earlier, the RBI had projected a growth rate of 6.5 per cent during Q2FY24.
The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation will release the GDP numbers on November 30. According to a Reuters survey, India is anticipated to expand by 6.8 per cent in the July-September quarter compared to the same period last year.
Meanwhile, Suman Chowdhury, Chief Economist and Head of Research, Acuité Ratings & Research Limited, said, “The resilience in urban demand is clearly one of the primary drivers of the current momentum in the Indian economy. Urban demand has reportedly been strong as reflected by a step up in passenger vehicle sales, online food deliveries, airline traffic and hotel occupancies which has particularly translated into a stronger than anticipated momentum in the services sector. While India didn’t win the ICC Cricket World Cup, the event surely did its bit to also push up consumption demand in the months of Oct-Nov’23 along with the regular festivities.” Nevertheless, he maintained that the rural engine is running on a slightly different track. “There are indications of a weaker rural demand due to the El Nino phenomenon, the estimated shortfall in the kharif crop and the risks to the current rabi crop,” said Suman Chowdhury.
Here are economists’ expectations from the GDP numbers today:
Rajani Sinha, Chief Economist, CareEdge
Economy is expected to hold up well in Q2FY24 with output expanding by 6.5 per cent. Strength in urban demand is expected to support growth as reflected in high-frequency data such as GST collections and credit growth numbers. However, a spike in consumer inflation in Q2 to 6.4 per cent and delayed festive season this year could weigh on private consumption growth. Further, contribution of net exports to growth could turn positive due to a significant narrowing of trade deficit compared to a year ago. On the supply side, the services sector will continue to power growth while construction and manufacturing are also expected to put up a good show.
Deepak Jasani, Head Retail Research at HDFC Securities.
The underlying momentum continues to remain strong amid sustained optimism in the services sector, hopes of strong capital expenditure by the government, and of pick up in consumption expenditure. In H2, India will have to deal with uneven rainfall, narrowing differentials with year-ago commodity prices, weak external demand and the cumulative impact of monetary tightening.
Rumki Majumdar, Economist, Deloitte India
A few high frequency numbers such as credit growth, flights taken, suggest that the services sector remains buoyed as consumer spending picks up. A build up to festive season bodes well for the economic activity. We are also expecting the industry sector to do well as seen in the rebound in auto sales, IIP manufacturing numbers, and strong corporate profits in sectors such as capital goods, cement and electronics. Overall, we expect GDP to be around 6.4- 6.7 per cent YoY in the July-September quarter.
Suman Chowdhury, Chief Economist and Head of Research, Acuité Ratings & Research Limited
The Indian economy has delivered a strong performance in the first half of FY24 with the GDP growth print in Q1FY24 high at 7.8 per cent YoY. This is set to be followed by another solid 6.8 per cent YoY growth in the second quarter, going by the data on high frequency indicators. Both the consumption and the investment drivers were in action in HIFY24; while economic activity has continued to be spearheaded by public investments in the infrastructure sector, India’s consumption landscape has also stood like an oasis of comfort.
The resilience in urban demand is clearly one of the primary drivers of the current momentum in the Indian economy. Urban demand has reportedly been strong as reflected by a step up in passenger vehicle sales, on-line food deliveries, airline traffic and hotel occupancies which has particularly translated into a stronger than anticipated momentum in the services sector. While India didn’t win the ICC Cricket World Cup, the event surely did its bit to also push up consumption demand in the months of Oct-Nov’23 along with the regular festivities.
Nevertheless, the rural engine is running on a slightly different track. There are indications of a weaker rural demand due to the El Nino phenomenon, the estimated shortfall in the kharif crop and the risks to the current rabi crop. Having been on a path of mend over the last three quarters, rural consumption recovery was however punctured in Q2 FY24 owing to a confluence of adverse macroeconomic and seasonal factors including high inflation in Q2 and the irregular monsoon. Some of the high-frequency data points have validated the Q2 FY24 slowdown in rural demand.
Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA Ltd
A normalising base and an erratic monsoon are expected to result in a sequential moderation in the GDP growth to 7.0 per cent in Q2FY24 from 7.8 per cent in Q1FY24. Regardless, we anticipate that the GDP expansion in this quarter will exceed the Monetary Policy Committee’s (MPC’s) October 2023 projection of 6.5 per cent. Looking ahead, uneven rainfall, narrowing differentials with year-ago commodity prices, the possible slowdown in momentum of Government capex as we approach the Parliamentary Elections, weak external demand and the cumulative impact of monetary tightening are likely to translate into lower GDP growth in H2 FY2024. As a result, we maintain our FY2024 GDP growth estimate at 6.0 per cent, lower than the MPC’s projection of 6.5 per cent for the fiscal.