India’s real GDP growth during the first quarter of FY24 is expected to be better than the Reserve Bank of India’s (RBI) estimate of 8%, economists said.
Economists at SBI, the country’s largest lender, have pegged India’s economic growth for the June 2023 quarter at 8.3%. They expect total FY24 growth to be higher at 6.5%.
The country’s real GDP in the quarter ended March 2023 had grown at 6.1% as compared to the year-ago period.
Meanwhile, the International Monetary Fund (IMF) has projected India’s growth at 6.1% in 2023, a 0.2 percentage point upward revision compared with the April projection, due to stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment.
Despite headwinds, In India, global economic activity was resilient in the Q4 FY23, driven mainly by the services sector, economists at SBI said.
“In Q1FY24, Manufacturing is sustained as reflected in better IIP, automobile sales, PMI data etc. Further, agriculture sales has been strong and power supply has been high. On the services side, passenger traffic picked up in Q4FY23 has sustained while Air cargo traffic increased,” said a note by Soumya Kanti Ghosh, the group chief economic adviser at SBI who has tracked 30 high frequency indicators to come at the estimate of 8.3%.
Most importantly, there has been a surge in capital expenditure in Q1, with the Central government spending 27.8% of budgeted, while states at 12.7% of budgeted, it said.
States like Andhra Pradesh, Telangana and Madhya Pradesh where elections are due have registered capital expenditure growth of up to 41%, it added.
Moreover, it noted that Indian Inc. reported top line growth of around 3% while EBITDA and PAT grew by more than 30% in Q1FY24 as compared to Q1FY23, contributed by sectors such as Banks, Auto, IT, Pharma, FMCG, Refineries etc.
On the banking sector, the SBI report noted that the credit growth continued to grow in double digits and has become broad based across sectors.
“Despite rising interest rates, the overall economic growth led to higher credit demand leading to banks reporting a robust rise in advances. Both the PSBs and private sector banks logged in an equal pace of loan growth during Q1FY24,” it said.
It believes the banks in India (especially PSBs) have strong financial health and are strongly comfortably placed to withstand any macroeconomic shock.
Source : Mint
