SBI sees India's GDP growing 8.3% in April-June, 6.7% in FY24

The Indian economy grew by a stellar 6.1 percent in January-March, a full percentage point higher than the consensus estimate.

The Indian economy may have grown by 8.3 percent in April-June, according to Soumya Kanti Ghosh, State Bank of India's group chief economic advisor, who also sees growth for the full-year ending March 2024 exceeding the 6.5 percent forecast by the government and the Reserve Bank of India (RBI).

"At SBI, we have developed an Artificial Neural Network (ANN) model with 30 high-frequency indicators… On the basis of the ANN model, we forecast that the quarterly GDP growth for the Q1FY24 (April-June 2023) would be at 8.3 percent," Ghosh said in a report on August 22.

At 8.3 percent, SBI's growth forecast for April-June will be the highest in four quarters. The economy had expanded by 13.1 percent in April-June 2022 due to a favourable base effect. This effect is still in play, but gradually fading away.

GDP data for April-June will be released at 5:30pm on August 31. According to the RBI's latest forecast, GDP growth may have risen to 8 percent in April-June from 6.1 percent in January-March. The January-March GDP growth number was far higher than economists' expectations of 5.1 percent.

For the full-year, the Indian central bank has pegged growth at 6.5 percent, with the quarterly break-up being as follows: 6.5 percent in July-September, 6 percent in October-December, and 5.7 percent in January-March 2-24, with risks "broadly balanced". Ghosh, however, sees growth in 2023-24 as a whole coming in at 6.7 percent.

Also Read: Chief Economic Adviser Nageswaran bullish about growth prospects after blowout GDP data

According to Ghosh, the first quarter of 2023-24 saw a huge increase in capital expenditure by both the centre and the states. While the Centre's capex in April-June stood at Rs 2.78 lakh crore – just under 28 percent of the record full-year target of Rs 10 lakh crore – after a 63 percent year-on-year increase in June, Ghosh said states such as Andhra Pradesh, Telangana, and Madhya Pradesh have registered capex growth of up to 41 percent.

Ghosh sees signs of rapid growth in corporate results too, noting that April-June saw Indian companies post profit after tax of PAT of more than 30 percent.

"Further, it is pertinent to mention that corporate margin, which was under pressure for the last few quarters, has shown signs of improvement since Q4FY23 (January-March 2023). EBIDTA margin, on an aggregate basis of more than 3,000 companies, improved by 274 basis points to 15.81 percent in Q1FY24 as compared to 13.07 percent in Q4FY23 and 12.60 percent in Q1FY23 (April-June 2022), contributed by low input prices," the SBI economist added.