New Delhi, Feb 21 (FN Agency) Indian economy likely grew at 6% year-on-year in October-December quarter (Q3) of current financial year 2023-24 from 7.6% in the previous quarter, according to an estimate by research and rating firm ICRA released on Wednesday. The moderation in Q3 GDP (gross domestic product) growth is mainly on account of slower growth in industry and agriculture sectors. ICRA said that the GVA (gross value added) growth is estimated to ease to 6% in Q3 FY24 from 7.4% in Q2 FY24, driven by the industrial (to +8.8% from +13.2%) and agriculture (to +0.5% from +1.2%) sectors, amidst an improvement in services (to +6.5% from +5.8%). The research firm said that anticipated deterioration in the industrial sector growth in Q3 FY24 is partly attributable to an adverse base effect and a deceleration in volume expansion even as the continued deflation in commodity prices kept profitability of some sectors favourable.
It further said that a mild 0.2% contraction in total spending by the Government of India and 25 state governments in Q3 FY2024 is expected to dull GVA growth. “Lower volume growth for the industrial sector, flagging momentum in certain indicators of investment activity, a slowdown in government expenditure, and an uneven monsoon are expected to dampen GDP growth to 6.0% in Q3 FY2024 from 7.6% in Q2 FY2024,” said Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA. ICRA estimates the industrial GVA growth to record a broad-based moderation to 8.8% in Q3 FY24 from 13.2% in Q2 FY24, led by all four sub-sectors, namely, manufacturing (to +10.0% from +13.9%), electricity (to +8.0% from +10.1%), construction (to +7.0% from +13.3%), and mining and quarrying (to +7.0% from +10.0%).
It projects manufacturing GVA expansion at a healthy 10.0% in Q3 FY24, twice as high as the 4.7% seen in Q1 FY24, albeit lower than the 13.9% recorded in Q2 FY2024, amid a deceleration in volume growth as reflected in the manufacturing IIP (index of industrial production). As per ICRA, the momentum in India’s investment activity moderated in Q3 FY24, with an easing in the YoY growth of nine of the 11 investment-related indicators, relative to Q2 FY24. In contrast to industry and agriculture, ICRA estimates the services GVA YoY growth to rise to 6.5% in Q3 FY24 from 5.8% in Q2 FY24, led by trade, hotels, transport, communication and services related to broadcasting (to +8.0% from +4.3%). The National Statistical Office (NSO) will release the official GDP estimate for the October-December quarter of FY24 on February 29.