Slower growth in industry and agriculture may have pushed down the growth of the Indian economy to 6 per cent during the three-month period of October-December (Q3) in Fiscal Year 2023-24 (FY24), research agency ICRA said on Wednesday. This aligns with the Reserve Bank of India’s (RBI) projection of 6 per cent.

On a sequential basis, the Q3 growth projection is lower, while on a year-on-year (y-o-y) basis, the projection is higher. The National Statistical Organisation (NSO) will release growth data for Q3 on Thursday, February 29.

“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,” said Aditi Nayar, Chief Economist with ICRA.  It may be noted that Q3 of FY23 recorded a growth of 4.4 per cent.

The agency estimated the GVA (gross value added) growth is expected to ease to 6 per cent in Q3 from 7.4 per cent in Q2. During this period, industrial growth is estimated to slow down to 8.8 per cent from 13.2 per cent. Similarly, the growth rate of agriculture is expected to come down to 0.5 per cent from 1.2 per cent. However, services are estimated to improve to 6.5 per cent in Q3 from 5.8 per cent of Q2.

Additionally, a mild 0.2 per cent contraction in the total spending of the Central and 25 State governments (excluding Arunachal Pradesh, Goa, and Manipur) in third quarter is expected to have dulled the GVA growth in the quarter. The agency also observed that the momentum in India’s investment activity moderated in the quarter under review.

Talking about the services sector, the agency said that the improvement in the services sector will be led by trade, hotels, transport, communication, and services related to broadcasting. “Several high frequency indicators related to this sub-sector displayed an improvement in their y-o-y growth in Q3 FY2024 relative to the previous quarter. This sub-set includes air cargo traffic, ports cargo traffic, GST e-way bills, railway freight, services exports, and the number of telephone subscribers,” it said.