An esteemed economist from the State Bank of India (SBI) has projected India's Gross Domestic Product (GDP) to experience a growth trajectory ranging between 6.7% to 6.9% in the third quarter (Q3) of the fiscal year 2023-24. Dr. Soumya Kanti Ghosh, the Group Chief Economic Advisor, emphasized in his recent report the anticipation of a slight downturn in economic activity during Q3 FY24, estimating the GDP growth within this specified range, accompanied by a Gross Value Added (GVA) growth of approximately 6.6%.
The assessment derives support from the SBI Composite Leading Indicator (CLI) Index, a compilation of 41 leading indicators spanning various sectors, indicating a marginal moderation in economic activity during Q3.
Dr. Ghosh underlined the validation of these estimates through the internally developed SBI-ANN (Artificial Neural Network) model, utilizing 30 high-frequency indicators. The ANN, trained on quarterly GDP data from 2011Q4 to 2020Q4, demonstrated precise in-sample forecast performance during the training period.
Contrary to global uncertainties, consumer confidence in India has shown resilience, propelled by optimism surrounding the overall economic outlook and employment conditions. Additionally, enterprise surveys reflect a robust business sentiment, suggesting a favorable trajectory.
Corporate performance in India has remained robust, with a noticeable acceleration in consumption trends across urban and rural sectors. Q3FY24 results from around 4,000 listed entities reveal substantial growth, with EBIDTA and profit after tax (PAT) both surpassing 30%, while the top line witnessed a 7% increase compared to Q3FY23.
Moreover, there has been an enhancement in margins, evident in the results of approximately 3,000 listed entities excluding BFSI (Banking, Financial Services, and Insurance), with an aggregate EBIDTA margin of 14.95% during Q3 FY24, compared to around 12% in the corresponding period of the previous year.
Corporate GVA, measured by EBIDTA plus employee expenses, demonstrated a robust growth of around 26% in Q3FY24 compared to Q3FY23.
Discussing the agricultural sector, Dr. Ghosh noted the First Advance Estimates projecting a production decline of major Kharif crops for 2023-24 by approximately 4.6% compared to FY23. However, the Rabi crops' sowing season, concluding on February 23, indicates a marginal increase in overall acreage, albeit with concerns over the decline in cereals' sown area by 6.5% from the previous year.
While the agricultural sector may witness some moderation if the Rabi output fails to offset the Kharif shortfall, the inland fish production has exhibited rapid growth, reaching 131.13 lakh tonnes in 2022-23. Contributing approximately 1.07% to the total national GVA and 6.86% to agricultural GVA, the fisheries sector could potentially support agricultural and allied sector growth in FY24, as per Dr. Ghosh's analysis.
Read Also | India's Economy Set to Expand by 6.4% in Third Quarter of Fiscal Year 2024
