India’s gross domestic product (GDP) growth in the January-March quarter of FY24 likely slowed to a four-quarter low of 6.8% from 8.4% in October-December, on account of slowdown in manufacturing and services sectors growth, according to the median of a poll of 19 economists. In Q4FY23, GDP had grown 6.2%.
At 6.8%, however, the country’s GDP growth would have grown way higher than the 5.9% projected by the National Statistical Office (NSO) in its second advance estimates (SAE). For the full year FY24, the NSO has pegged the GDP growth at 7.6%; but with the projected fourth quarter growth, India’s economy likely grew at 7.8% in the year.
On the gross-value-added (GVA) front, economists say the growth in Q4FY24 likely slowed to 6.1% from 6.5% in Q3FY24. The wedge between GVA and GDP growth rates in Q4 expected narrowed to only 70 basis points (bps) as against 190 bps in Q3, due to a much slower contraction in the subsidy outgo. In Q4FY24, the subsidy expenditure contracted 23% on year, as against 54% in the December quarter.
IDFC FIRST Bank Chief Economist Gaura Sen Gupta said that during Q4, manufacturing sector growth was likely subdued with decline in net profit growth of non-financial listed companies, after rising for four consecutive quarters. “The support from lower raw material costs waned in H2FY24 with pick-up in input costs,” she said.
DBS Bank’s Senior Economist Radhika Rao said that rural demand continued to catch up in the final quarter of FY24, as signalled by the pickup in FMCG volume sales, two-wheeler sales and lower unemployment rate, whilst demand for MNREGA tapered off due to the start of the rabi harvesting period towards the end of the quarter.
On the expenditure front, the government’s capital spending picked pace ahead of the elections, while the overall infrastructure industries activity moderated towards the end of the period, including steel production, economists said.
Investment activity was healthy in Q4 FY2024, amidst a mixed trend, displayed by various investment-related lead indicators. There was a surge in new project announcements to the second-highest quarterly level owing to the state investor meets held in January 2024, as well as an appreciable increase in completions of both private and Government-led projects, noted ICRA in a report.
Net exports, or the country’s overall trade deficit is likely to pull down growth at a much slower rate in Q4FY24 than the previous quarters, with the reduction in merchandise trade deficit and rise in services’ surplus. The overall trade deficit in the March quarter was only $5.6 billion as against $27.6 billion in the December quarter.