State Bank of India (SBI) economists have forecast India's GDP growth in the third quarter (Q3) of 2024-25 to the tune of 6.2-6.3%. The growth is seen because of solid demand, direction of capital expenditure (Capex), and the rise in EBIDTA and corporate Gross Value Added (GVA) observed by India Inc.
Based on SBI research paper, issued yesterday, the softening which took place during second quarter (Q2) has been construed as a "blip."
It further added, "Assuming no drastic revision is forthcoming to the numbers given for previously recorded Q1 and Q2 from the National Statistical Office (NSO), our estimate for year-to-year FY25 GDP would be at 6.3%."
Offical figures regarding GDP of third quarter would become available by Feb 28.
It has been highlighted in the report that the number of indicators reflecting acceleration has increased to 74% in Q3 FY25 from 71% in Q2 FY25.
The rural economy remains an important driver of sustaining growth, with steady agricultural wage growth, higher domestic tractor sales, and greater rabi crop sowing. Stability in other sectors is driven by these factors.
The report also points out that Capex is in positive direction in Q3 FY25, with the majority of states' Capex percentages of the Budget Estimate (BE) lower in FY25 so far, but gaining momentum in Q3, which is a good sign for growth in the future.
It also indicates a pick-up in the Index of Industrial Production (IIP) manufacturing growth, which increased from 3.3% in Q2 FY25 to 4.3% in Q3 FY25, along with encouraging momentum in the SBI Index.
India Inc. has recorded encouraging EBIDTA growth and better margins (44 basis points) after two quarters, and corporate GVA has witnessed substantial improvement on a quarter-over-quarter basis.
In spite of economic challenges across the world, India is still among the fastest-growing economies. The report adds that the International Monetary Fund (IMF) has revised its global growth projection, forecasting India's growth at 6.5% for FY25 and FY26, based on robust domestic demand, infrastructure development, and strategic government initiatives.
SBI has crafted a "Nowcasting Model" to forecast GDP based on 36 high frequency indicators of industrial activity, services, and global economy. A dynamic factor technique is used to estimate the collective factor of all the indicators in the period between Q4 FY13 and Q1 FY23.
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