India’s gross domestic product (GDP) may grow 6.7-6.9 per cent in the third quarter (October to December) of FY24 due to a slight decline in economic activity, according to State Bank of India’s economic research department (ERD).

The GDP growth in Q1 (April to June) and Q2 (July to September) of FY24 was 7.8 per cent and 7.6 per cent, respectively.

SBI’s composite leading indicator (CLI), a basket of 41 leading indicators, shows a slight moderation in economic activity in Q3, the ERD said in its ‘Ecowrap’ report.

The CLI index is based on monthly data and includes parameters from almost all the sectors.

“Our (GDP) estimates are corroborated with the in-house developed SBI-ANN (artificial neural network) model, with 30 high-frequency indicators.

“ANN has been trained for the quarterly GDP data from 2011Q4 (January to March) to 2020Q4 and the in-sample forecast performance of the model in the training period has been precise,” said Soumya Kanti Ghosh, Group Chief Economic Adviser, SBI.

The ANN model allows computer programs to recognise patterns and solve problems through machine learning.

“As a counter-narrative to the global gloom, consumer confidence has strengthened further in India, driven chiefly by optimism about the general economic situation and employment conditions. Various enterprise surveys also point to strong business optimism,” Ghosh said.

Corporate gross value added (GVA), as measured by EBIDTA (earnings before interest, taxes, depreciation, and amortisation) plus employee expenses, reported a growth of around 26 per cent in Q3FY24 as compared to Q3FY23, as per the report.

RBI Governor Shaktikanta Das, in his monetary policy statement earlier this month, emphasised that domestic economic activity remains strong.

He underscored that the first advance estimates (FAE) placed the real GDP growth at 7.3 per cent for 2023-24, marking the third successive year of growth above 7 per cent.