Economy
India Q4 GDP growth likely slowed down to 7%: Mint poll
Summary
The median estimate of 20 economists showed India Q4 GDP growth slowing mainly due to the slowdown in industrial growth and subdued agricultural activities. However, strong growth in all quarters, with three of the four printing 8%-plus, would result in GDP growth rising to 7.9% in FY24.The Indian economy likely ended the previous financial year on a strong footing, despite a slower fourth quarter, according to a Mint poll of economists.
According to the median estimate of the 20 economists, India's Q4 GDP growth slowed to 7.0% from 8.4% the previous quarter mainly due to the slowdown in industrial growth and subdued agricultural activities.
However, strong growth in all quarters, with three of the four printing 8%-plus growth, would result in GDP growth rising to 7.9% in FY24 from 7.0% the previous year, according to estimates by 19 economists.
GDP data for January-March and FY24 are scheduled to be released on 31 May.
“The slip in EBITDA (earnings before interest, taxes, depreciation, and amortization) growth of corporate earnings of BSE 500 companies in Q4 FY24 likely caused the drop in manufacturing GVA (gross value added) growth to 8% from 11.6% in Q3 FY24," said Union Bank in a note on 27 May.
“Overall, bullish GDP growth numbers across four quarters of FY24 have likely led to a spike in full-year GDP growth," it added.
Agriculture GVA, which contracted 0.8% in the previous quarter, is expected to remain in the contraction zone, pulling economic growth down. However, a recovery may be expected in the current financial year.
“Notwithstanding the overhang of the unfavourable 2023 monsoon rains on agriculture output, there are some green shoots, suggesting that a nascent revival in rural demand may be on the anvil," said Icra in a note on 21 May.
Moreover, the India Meteorological Department has projected “above normal" rainfall in monsoon this year, which could lead to a revival in agricultural activities.
In the previous quarter, sharp divergence in GDP and GVA has caused controversy over economic growth. The GDP growth was 1.9 percentage points higher than GVA, mainly due to a government subsidy payout decline. GDP is calculated by adding net taxes (taxes minus subsidy) to GVA.
However, this gap is likely to close in the fourth quarter, which is also expected to be one of the major reasons behind the slower growth number.
Overall, the Indian economy has shown resilience since the recovery from the disruptions caused by the covid-19 pandemic even as the global economy faced a slowdown.
According to the forecast released by the International Monetary Fund (IMF) last month, the global economy grew 3.2% in 2023 and emerging and developing economies grew 4.3%, while India stood out with its expected growth of 7.8% in 2023-24.
