As India awaits the release of its Gross Domestic Product (GDP) numbers for the October-December quarter of the fiscal year 2023-24, economists and research agencies foresee a potential slowdown in economic growth. Projections place the growth rate in the range of 6 to 6.8%, with considerations for various factors influencing the overall economic landscape.
The Reserve Bank of India (RBI) has projected a growth rate of 6.5%, while a report by SBI Research suggests that GDP might grow between 6.7 to 6.9%, accompanied by a Gross Value Added (GVA) growth of 6.6%. However, this estimation comes with a caveat – a growth of 6.8% is dependent on the stability of the existing economic base. The possibility of hitting 7% remains if there are downward revisions in the Q3FY23 estimates.
Agricultural Sector Challenges: The performance of the agricultural sector is expected to be a crucial factor in determining the overall GDP growth. According to First Advance Estimates, the production of major kharif crops for 2023-24 has seen a decline of 4.6% from the previous fiscal year. Although the rabi season indicated a slight increase in overall acreage, concerns arise over cereals, which saw a 6.5% decline.
While the inland fish production has shown significant growth, constituting about 1.07% of the total national GVA, its impact on supporting the Agri and Allied sector growth in FY24 remains a consideration.
Sector-Wise Impact: ICRA’s earlier assessments highlighted potential challenges, particularly in the industrial sector. Factors such as slowing investment activity indicators, a decline in government expenditure, and an uneven monsoon were identified as contributors to a potential dip in GDP growth to 6% in Q3 FY2024 from 7.6% in Q2 FY2024.
The agency’s estimates suggest a GVA growth easing to 6%, with industrial growth slowing down to 8.8%, agriculture growth reducing to 0.5%, and services improving to 6.5% in Q3.
As the Q3 GDP figures are unveiled, analysts will closely examine the performance of different sectors to gauge the broader economic landscape.
