FY23 GDP growth may exceed 7%, Jan-March quarter could be 5%: Agencies

The economic growth, as measured by Gross Domestic Products (GDP) may have grown between 6.8 to 7.1 per cent in FY23, various agencies expect. The government will release Provisional Annual Estimates for FY23 and quarterly GDP estimates for the quarter January-March, 2023 (Q4 FY23) on Wednesday 31 May 2023.

Estimates for Q4 FY23 have been in the range of 4.8 to 5.1 per cent. On February 28, the Statistics Ministry, in its second advance estimate, expected the real GDP growth rate at 7 percent as compared with that of 9.1 per cent in 2021-22. It also gave the Q3 (October-December) FY23 GDP growth number at 4.4 per cent. Based on the three quarter numbers, it was extrapolated that fourth quarter number is likely to grow 5.1 per cent.

On Tuesday, the Reserve Bank of India (RBI), in its annual report for FY23, said the Indian economy exhibited a robust resilience in 2022-23 amidst a global turmoil following the war in Ukraine, and recorded a growth of 7 per cent, the highest among major economies in the world.

 “Sound macroeconomic fundamentals, a resilient financial system reflected in healthy balance sheets of banks and non-banking financial companies (NBFCs) and a de-leveraged corporate sector imparted resilience to counter the adverse global spillovers,” the report said.

Last week, RBI Governor Shaktikanta Das said the economic growth number for FY23 may hold a ‘positive surprise.’ Earlier, the RBI said that the GDP growth rate could be 7 per cent. “All the high-frequency indicators maintained their momentum in the fourth quarter. Therefore, we should not be surprised if the growth is slightly more than 7 per cent for FY23,” he had said.

Similar optimism has been expressed by a research report by State Bank of India, which said amidst this global hullabaloo, India is expected to continue its showdown in pursuing a different pathway of zeroing in on the growth drivers , looking for a renewed surge in resilient manufacturing while supporting services sector to embrace enhanced efficiency.

Locally, domestic consumption and investment stand to benefit from stronger prospects for agricultural and allied activities, strengthening business and consumer confidence and strong credit growth while supply responses and cost conditions are poised to improve as inflationary pressure is easing.

“SBI’s Artificial Neural Network model, based on 30 high frequency indicators from key sectors and tuned/trained to project the GDP numbers, forecasts the quarterly GDP growth for the Q4FY23 at 5.5 per cent. At this rate, India’s GDP growth for FY23 is likely at 7 per cent,” the report said.  

However, some other agencies are not so bullish. ICRA projected the year-on-year (y-o-y) growth of the GDP in Q4 FY23 at 4.9 per cent, a modest step-up from the 4.4 per cent recorded in Q3 FY23. Similarly, according to a a research report by HDFC Bank, high frequency data suggests that economic activity held up in Q4 FY23.

“While slowdown in external demand weighed on domestic manufacturing sector GVA, the moderation in input costs and global commodity prices is likely to have been positive for profit margins. On the agriculture side, record wheat production bodes well for the sector’s outlook. We estimate Q4 GDP growth at 4.9 per cent y-o-y compared with 4.4 per cent in Q3.