Q4 GDP growth may moderate to 6.5-6.7%: Analysts

According to ICRA, the agricultural sector is expected to contract for the second consecutive quarter, highlighting ongoing struggles in rabi output.
Q4 GDP growth may moderate to 6.5-6.7%: Analysts

NEW DELHI : The country’s gross domestic product (GDP) is likely to moderate to 6.5-6.7% year-on-year in Q4FY24, raising concerns over a slowdown in gross value added (GVA) growth, driven by challenges in the industrial and services sectors, as per experts. Meanwhile, the growth for whole year is expected to come in at 7.8% as predicted by the International Monetary Fund (IMF).

According to ICRA, the agricultural sector is expected to contract for the second consecutive quarter, highlighting ongoing struggles in rabi output.

“ICRA has projected the year-on-year (YoY) expansion of the GDP to moderate to a four-quarter low of 6.7% in Q4 FY24 from 8.4% in Q3 FY24,” the rating agency said. “For the full-year FY24, ICRA expects the GDP and GVA growth to print at 7.8% and 7.0%, respectively, unless the growth for 9M,FY24 is revised,” it further added.

As per ICRA, the gap between the GDP and the GVA growth is likely to moderate to 100 basis points (bps) in Q4FY24 from the high 185 bps in the previous quarter. This is on account of an expected lower expansion in net indirect taxes in Q4 owing to a narrower dip in the subsidy outgo.

“We expect Q4FY24 GDP growth may exceed 6.5%, thereby enabling a full-year growth for FY24 to be close to 7.8% as predicted by the IMF,” said DK Srivastava, chief policy advisor at EY India. Government revenues, including taxes and other sources, have shown resilience, with gross tax revenues increasing notably by 13.4% for the first eleven months of fiscal year 2024, according to data from the Controller General of Accounts, Srivastava added.

State Bank of India, in its economic report in March, had said, “For FY24 GDP growth is expected to increase by 7.6% and GVA growth by 6.9%. Based on the FY24, 7.6% GDP growth, we estimate Q4 GDP growth at 5.9%, which we believe is an understatement. Thus it is most likely that FY24 GDP growth could be within striking distance of 8%.”

GDP, GVA gap may moderate to 100 bps in Q4

According to the ICRA, the gap between the GDP and the GVA growth is expected to moderate to 100 basis points (bps) in Q4FY24 from the high 185 bps in the previous quarter. This is on account of an expected lower expansion in net indirect taxes in Q4 owing to a narrower dip in the subsidy outgo

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