The economy is likely to have grown 5-5.1 percent in the October-December 2022 quarter due to the normalization base, much lower than the 6.3 percent growth recorded in the previous quarter, analysts said.
Normal basis refers to the comparable figure of the corresponding period of the previous financial year. But the basis for calculating the growth rate is reduced when the previous figures are not comparable due to certain extreme conditions.
Compared to the pre-Covid figure, GDP is likely to have grown 11.6 per cent in the third quarter, up from 7.6 per cent in the previous quarter, boosted by the ongoing recovery in the services sector, said Aditi Nayar, chief economist and head research at Icra. Reviews.
On the other hand, Rahul Bajoria, head of British brokerage Barclays India, said the economy would have grown slightly lower at 5 percent in the October-December quarter of FY23.
The government is expected to release third-quarter macroeconomic data on February 28. The government expects the economy to end the current fiscal year with growth of 7 percent or more.
“Economic activity remained markedly uneven in the third quarter, amid the benefits provided by robust demand for contact-intensive services and optimistic sentiment around the holiday season. Government expenditure trends were mixed, with healthy revenue expenditure by the Center amid a base effect-induced contraction in the economy. capital expenditure.
“While services exports increased by 25 percent, non-oil exports contracted by 8.2 percent in the quarter. Preliminary estimates of kharif production also indicate a mixed trend in crop production, with increases in sugarcane, cotton, crude oil and other inputs. grains and oilseeds, and a decline in rice and legumes. Amid continued pressure on input prices for certain sectors, we expect GDP to grow by 5.1 percent in the third quarter,” Nayar said.
Also read: Funds deposited for NPS cannot be transferred to state governments: Center
The increase in gross value added at basic prices is likely to have declined from 5.6 percent in the second quarter to 4.9 percent in the third quarter. While growth in the services sector would show a moderation based on base effects (from 7.4 percent to 9.3 percent respectively), it would slow growth in agriculture, forestry and fisheries (4 percent) and industry by 1 percent surpass, she said. .
The performance of 12 of the 14 high-frequency services sector indicators is likely to have deteriorated in the third quarter compared to the second quarter, on a normalizing basis, even as some contact-intensive sectors performed close to pre-pandemic levels in the third quarter .
The combined revenue expenditure growth of 22 states fell to 5.4 percent in the third quarter from 15.9 percent in the second quarter. However, driven by higher subsidies, especially on fertilisers, the Centre’s non-interest revenue expenditure rose 13.4 per cent in the third quarter after contracting 1.4 per cent in the second quarter. Overall, the agency expects the services sector’s GVA to reach 7.4 percent in the third quarter.
Investment activity was strong in the third quarter, with improved performance of several investment-related indicators compared to the second quarter, such as capital goods production (8.8 percent from 6.9 percent) and infrastructure/construction goods (7.3 percent from 5.3 percent). and the value of new project announcements (up to a three-quarter high of Rs 6.6 lakh crore in the third quarter, compared to Rs 4.4 lakh crore in the second quarter).
Meanwhile, Bajoria, head of Barclays India, said in a report that GDP is likely to have grown by 5 percent in the third quarter, but on a sequential basis, GDP is likely to have grown faster than in the second quarter as several sectors, especially the high-end sectors, contact services are moving towards a full reopening.
“Our 5 percent growth forecast implies 6.9 percent growth for the full calendar year, and 7 percent growth for the fiscal, as high-frequency indicators look quite strong in Q1FY23/Q4FY23, he said, adding that the economy continues to perform well in key services and agriculture sectors domestically, while manufacturing remains the only area with visible weakness.
“For FY24, we continue to expect a soft landing as tighter monetary conditions and still high inflation take their toll. We continue to see growth moderating to 6 percent and forecast steady GDP growth of 6.5 percent in FY25, Bajoria said.
Catch latest stock market updates here. Visit for all other news related to Business, Politics, Technology, Sports and Auto Zeebiz.com.
