Chennai: ICRA has projected GDP growth for the December quarter of FY24 to be 6 per cent.
The Q3 GDP might moderate sequentially to 6 per cent in Q3 FY2024 from 7.6 per cent in Q2 FY2024. Further, the GVA growth is estimated to ease to 6 per cent in Q3 FY2024 from 7.4 per cent in Q2 FY2024. This moderation will be driven by the industrial GVA that would come down to 8.8 per cent from 13.2 per cent and agriculture GVA growth to 0.5 per cent from 1.2 per cent. However, services might see an improvement in GVA growth to 6.5 per cent from 5.8 per cent.
The anticipated deterioration in the industrial sector growth in Q3 FY2024 is partly attributable to an adverse base effect in Q3 FY2023 and a deceleration in volume expansion, even as the continued deflation in commodity prices kept profitability of some sectors favourable.
Additionally, a mild 0.2 per cent contraction in the total spending of the central government and 25 state governments, except Arunachal Pradesh, Goa and Manipur in Q3 FY2024 is expected to have dulled the GVA growth in the quarter.
“Lower volume growth for the industrial sector, flagging momentum in certain indicators of investment activity, a slowdown in government expenditure and an uneven monsoon are expected to dampen the GDP growth to 6 per cent in Q3 FY2024 from 7.6 per cent in Q2 FY2024,” Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA said
The momentum in India’s investment activity moderated in Q3 FY2024. For instance, the capital outlay and net lending of 25 state governments shrank by 3.9 per cent on a YoY basis, after having surged by 42.4 per cent in Q2 FY2024.
Owing to the decline in output across all major kharif crops projected by the First Advance Estimates, ICRA projects the growth in agriculture, forestry, and fishing to dip to a muted 0.5 per cent in Q3 FY2024 from 1.2 per cent in Q2 FY2024.
However, services GVA YoY growth may rise to 6.5 per cent in Q3 FY2024 from 5.8 per cent in Q2 FY2024, led by trade, hotels, transport, communication and services related to broadcasting.
