New Delhi : India's economic growth is expected to have moderated to 6.5% in the third quarter of the 2023-24 fiscal year (October-December), according to a Moneycontrol survey of 10 economists. This marks a decline from the 7.6% growth recorded in the previous quarter.
Key Takeaways:
Economist Predictions: The survey suggests a wide range of forecasts for Q3 GDP growth, ranging from 6.0% (ICRA) to 7.0% (IndusInd Bank).
Factors Affecting Growth: Lower industrial output, subdued investment activity, and uneven monsoon are seen as key drags on growth.
Positive Signs: Despite the slowdown, some sectors like agriculture and services may see improved performance.
Comparison to Forecasts: The Reserve Bank of India (RBI) currently predicts Q3 growth at 7%, while the government's first advance estimate pegged it at 7.3%.
Detailed Analysis:
Industrial Growth: Industrial production, as measured by the Index of Industrial Production (IIP), averaged 5.9% in Q3, down from 7.8% in the previous quarter. Manufacturing output growth also slowed down from 6.8% to 5.1%.
Agriculture: Agricultural growth is expected to accelerate to over 2%, compared to 1.2% in Q2, the lowest in four and a half years.
Services: The services sector is also projected to see higher growth compared to 5.8% in Q2, supported by the festive season and the ICC World Cup held in India.
Investments: While government capital expenditure maintained growth, spending by 25 state governments declined.
Expert Opinions:
Aditi Nayar, Chief Economist at ICRA, expects growth to be lower than the consensus at 6.0%, attributing it to various factors like lower industrial volume growth and slowdown in government expenditure.
Rahul Bajoria, Managing Director at Barclays, emphasizes that the moderation should be viewed in the context of elevated growth of 7.7% in the first half of FY24.