GDP growth is expected to moderate to a four-quarter low of 6.7 per cent in Q4FY24 from 8.4 per cent in Q3FY24, stated a report by ICRA.
The domestic retail tractor volumes reverted to a YoY 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.
The industrial GVA growth, per ICRA estimates, is expected to record a broad-based moderation to 7.9 per cent in Q4 FY2024 from 10.4 per cent in Q3 FY2024.
The YoY growth in India’s services exports decelerated to 4.2 per cent in Q4 FY2024 from 5.2 per cent in Q3 FY2024.
GDP growth is expected to moderate to a four-quarter low of 6.7 per cent in Q4FY24 from 8.4 per cent in Q3FY24, stated a report by ICRA. Further, the growth in gross value added (GVA) is also estimated to ease to 5.7 per cent in Q4FY24 from 6.5 per cent in Q3 FY24. This, it added, will be driven by the industrial (to +7.9 per cent from +10.4 per cent) and services (to +6.2 per cent from +7.0 per cent) sectors. Also, the agricultural GVA is expected to contract for the second straight quarter in Q4FY24 (-0.5 per cent), which is similar to Q3 (-0.8 per cent), amid weak trends in the rabi output (barring wheat) and concerns related to yields, ICRA stated.
The report further maintains that the gap between GDP and the GVA growth is likely to moderate to approximately 100 basis points (bps) in Q4FY24 from the particularly high 185 bps in the previous quarter. Per ICRA, 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). For the full-year FY2024, 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.
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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.”
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“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 YoY 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,” added Aditi Nayar.
The industrial GVA growth, per ICRA estimates, is expected to record a broad-based moderation to 7.9 per cent in Q4 FY2024 from 10.4 per cent in Q3 FY2024. This will be led by all four sub-sectors, namely, manufacturing (to +8.0 per cent from +11.6 per cent), electricity (to +7.5 per cent from +9.0 per cent), construction (to +8.5 per cent from +9.5 per cent), and mining and quarrying (to +5.5 per cent from +7.5 per cent).
“As per the quarterly results of a relatively small sample of listed manufacturing companies, the profit margins eased slightly in Q4 FY2024 vis-a-vis Q3, partly owing to a narrower deflation in input costs as reflected in the WPI-industrial raw materials (-1.9 per cent in Q4 vs. -2.8 per cent in Q3). This, coupled with the lower growth in manufacturing IIP volumes (to +4.5 per cent from +5.4 per cent), suggests that the YoY growth in manufacturing GVA is likely to have eased in Q4 FY2024, with the adverse base (+0.9 per cent in Q4 FY2023; -4.8 per cent in Q3 FY2023) also likely to weigh on growth,” ICRA said.
Now, the services GVA, according to ICRA estimates, is expected to ease slightly to 6.2 per cent in Q4FY24 from 7.0 per cent in Q3FY24. The YoY growth in India’s services exports decelerated to 4.2 per cent in Q4 FY2024 from 5.2 per cent in Q3 FY2024.
Investment activity, per ICRA, was healthy in Q4 FY2024, amidst a mixed trend, displayed by various investment-related lead indicators. There was a surge in new project announcements to the second-highest quarterly level owing to the state investor meets held in January 2024, as well as an appreciable increase in completions of both private and Government-led projects. However, some investment-related indicators moderated in Q4 FY2024 vis-à-vis Q3, along with an implicit slowdown in new project proposals in February-March 2024, relative to January 2024.
The YoY growth of the capital outlay and net lending of 24 state governments (except Arunachal Pradesh, Jharkhand, Manipur, and Goa) eased to 3.5 per cent in Q4 FY2024 from 11.5 per cent in Q3 FY2024, partly attributed to the base effect.
