Rating agency ICRA, expects the country’s Gross Domestic Product (GDP) growth, to moderate to four-quarter low of 6.7 per cent in Q4 FY2023-24 from 8.4 per cent in Q3 FY2023-24.

The growth in the gross value added (GVA), is estimated to ease to 5.7 per cent in Q4 FY2023-24 from 6.5 per cent in Q3 FY2023-24, driven by lower growth in industrial (to +7.9 per cent from +10.4 per cent), and services (to +6.2 per cent from +7.0 per cent) sectors. 

This forecast, is significant, as it comes just ten days before the official GDP numbers for the fourth quarter (January-March, 2024), and the provisional estimates for 2023-24, are scheduled to be released by the Central Government on May 31.

For the full-year FY2023-24, ICRA expects the GDP, and GVA growth to print at 7.8 per cent and 7.0 per cent, respectively, unless the growth for 9M FY2024, is revised.

Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA Ltd. said: “Lower volume growth, coupled with diminishing gains from commodity prices, dampening the profitability of some of the industrial sectors, is expected to dampen India’s GVA growth in Q4 FY2024.”

Indian economy had recorded growth of 8.2 per cent in the June quarter, 8.1 per cent, in the September quarter, and 8.4 per cent in the December quarter of 2023-24.

ICRA also said on Tuesday, that the gap between the GDP and the GVA growth, is likely to moderate to ~100 basis points (bps) in Q4 FY2024, from the particularly high 185 bps in the previous quarter. This is on account of an expected lower expansion in the net indirect taxes in Q4, owing to a narrower dip in the subsidy outgo (-22.8 per cent in Jan-Feb 2024; -53.6 per cent in Q3 FY2024). 

Notwithstanding the overhang of the unfavourable 2023 monsoon rains on agri output, there are some green shoots, suggesting that a nascent revival in rural demand, may be on the anvil. The domestic retail tractor volumes reverted to a y-o-y expansion of 7.7 per cent in Q4 FY2024, after contracting by 4.0 per cent in Q3 FY2024. Moreover, some listed FMCG players, pointed to a recovery in the rural economy, particularly in the non-food segment, in Q4 FY2024. This can be partly attributed to the uptick in demand, during the marriage season as well as a low base. Additionally, urban consumption is expected to have remained robust, albeit uneven in Q4 FY2024,”Nayar added.

The agricultural GVA, is expected to contract for the second straight quarter in Q4 FY2024 (-0.5 per cent), at a pace similar to Q3 (-0.8 per cent), amid weak trends in the rabi output (barring wheat), and concerns related to yields, ICRA has said.

While the Centre’s capital expenditure expanded by 31.6 per cent y-o-y to ₹ 1.3 trillion in January-February 2024, it may have eased in March, 2024 on a y-o-y basis, amidst the Model Code of Conduct, ICRA noted.