GDP growth for Q4FY24 projected at 6.1-6.7%, lower than the plus-8% of previous three quarters

India's Q4 FY24 GDP likely to have grown at 6.1-6.7%: Economists

India's GDP in the fourth quarter of the financial year 2023-24 is anticipated to have grown between 6.1% and 6.7%, a decline from the over 8% growth rate observed in the previous three quarters, PTI reported citing projections by various economists.

The government is set to release the GDP figures for the fourth quarter (January-March 2024) and the provisional estimates for the 2023-24 fiscal year on May 31.

India's GDP grew 8.4 percent in the December quarter, the highest in six quarters. Last time India's economy grew at a faster clip was in the first quarter of 2022-23, when it clocked a growth of 13.1 percent, which was later revised down to 12.8 percent.

Economists estimate that the overall growth for the 2023-24 fiscal year will be in the range of 7.6% to 7.8%. However, government's chief economic adviser V Anantha Nageswaran said earlier this month that there is a high possibility of India’s economic growth touching 8 percent in FY24.

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The Indian economy reported growth rates of 8.2% in the June quarter, 8.1% in the September quarter, and 8.4% in the December quarter of 2023-24.

Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, told PTI that high-frequency data points to robust growth across various sectors. She noted that the trade and hotel industries performed well in the fourth quarter.

“Manufacturing activities have been strong, and construction-related and investment segments should be doing better, but the agriculture sector might lag and even see contraction during the quarter. We are expecting a 6.1% GDP growth for the fourth quarter, which should result in an annual GDP growth close to 7.6%,” Bhardwaj stated.

In the March quarter of the 2022-23 fiscal year, India’s GDP expanded by 6.1%, according to estimates released on May 31, 2023, with full-year growth at 7%.

"We anticipate some moderation in economic activity within the services sector and across the industrial sector. This is why we expect the Gross Value Added (GVA) to be 5.7% for the fourth quarter, while the GDP number is expected to be 6.1%," she added.

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GDP measures the total value of goods and services produced within a period, whereas GVA is GDP minus net taxes (gross tax collection minus subsidies).

Looking ahead to the current fiscal year (2024-25), Kotak Mahindra Bank projects a growth rate of 6.6% with an upward bias. Bhardwaj noted that rural consumption is likely to accelerate, but export growth could face challenges in the latter half of the fiscal year.

"Currently, exports have been relatively strong. We haven't seen significant impacts from global demand disruptions on exports yet, but we expect some impact going forward. This is an area where we foresee growth might decline," she said.

Bhardwaj also mentioned that while rural consumption demand is expected to rise, urban demand might reach a plateau. Therefore, there could be a positive effect on consumption in the current fiscal year.

DK Srivastava, Chief Policy Advisor at EY India, said that both domestic and international institutions predict robust growth of around 7% for India in the fiscal year 2025.

"It is anticipated that GDP growth in the fourth quarter of fiscal year 2024 might exceed 6.5%, resulting in annual growth close to 7.8%, as projected by the IMF," Srivastava stated.

India Ratings & Research, another rating agency, expects the GDP growth rate for the March quarter of 2023-24 to be 6.2%.

Domestic rating agency ICRA recently projected India’s GDP growth to slow to a four-quarter low of 6.7% in the March quarter of the 2023-24 fiscal year. For the full 2023-24 fiscal year, ICRA estimates GDP growth to be 7.8%.

In its April monetary policy review, the Reserve Bank of India projected a GDP growth rate of 7% for 2023-24.