The country’s GDP (gross domestic product) growth is likely to be around 6.9 per cent-7.1 per cent in the Q2FY24, according to the latest report by SBI Ecowrap.
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This will firmly push up the FY24 growth rate over RBI projections at 6.5 per cent, the report said.
“Domestic economic activity in Q2 has been supported by robust agricultural performance, sustained buoyancy in services, strong capital expenditure by centre (49 per cent of budgeted) and states (32 per cent of budgeted) and a robust pick up in consumption expenditure,” the report noted.
However, the report noted that concerns about global growth are still a spot of bother. US labour markets are now beginning to wilt a bit with a consistent theme emerging in the Non Farm Payroll releases this year – the headline figures have been revised lower for 8 of the 9 months.
“We believe that once US consumers wind up excess savings, that are still estimated around $1 trillion, US economy could be headed for a slowdown that now looks more frontloaded beyond 2024. It may be noted that US elections are due in November 2024 and thus the Democrats may not be comfortable with a slowing economy before elections and hence a frontloaded slowdown looks more imminent,” the report further noted.
Breaking the GDP growth details, the report noted that in Q2FY24, Indian Inc., though reported a top-line growth of 4 per cent, it saw EBIDTA and PAT growth of 66 per cent and 31 per cent, respectively, as compared to Q2FY23 chiefly contributed by sectors such as banks, auto, capital goods, cement, electronics, power generation, realty, FMCG, etc.
The report noted that growth indicates that corporate results have been strong across the universe and are largely broad-based.
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It further noted that in nominal terms the weighted contribution of net exports in nominal GDP was positive at 1.3 per cent in Q1 FY24. In Q2 FY24, goods trade deficit increased to $60 billion, while services trade surplus improved to $40 billion, leading to net exports deficit of goods and services at $20 billion.
In year-on-year terms, this is 55 per cent higher than net exports in Q2 FY23 (deficit of $44 billion). Accordingly, the net exports contribution to nominal GDP is likely to come positive and increase in Q2 FY24 compared to Q1 FY24, possibly around 2 per cent.
GDP growth projection
The Union finance ministry on Tuesday noted that the current financial year should conclude as projected with a strong growth performance and macroeconomic stability as more than half of this fiscal has witnessed positive developments in the economy.
In the Monthly Economic Review for October, the ministry also said the downside risk will continue to be inflation that should keep both the government and the RBI on high alert.
Research firm ICRA has noted that the Indian economy is anticipated to have expanded by 7 per cent during the second quarter of the current fiscal year, surpassing the projection of the Reserve Bank of India’s rate-setting panel, the Economic Times.
ICRA said in its report that India’s economic growth is anticipated to have eased to 7 per cent in the second quarter, following a 7.8 per cent growth in the first quarter. This adjustment is attributed to a normalising base and unpredictable monsoon patterns.
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“While the YoY growth in the remaining four indicators weakened in Q2 FY2024 relative to Q1, all of them witnessed a double-digit expansion in the quarter, including the CV registrations (+13.5 per cent), cement production (+10.2 per cent), the states’ capital outlay and net lending (+33.5 per cent), and the Government of India’s (GoI’s) capex (+26.4 per cent),” ICRA said in its note.
