The State Bank of India (SBI) economists have projected a GDP growth of 4.6 per cent for the December quarter on Tuesday, a PTI report said. Group chief economic adviser at SBI Soumya Kanti Ghosh, in a report, said that the lower forecast was due to poor corporate results.
However, SBI’s projection is still higher than the RBI’s forecast of 4.4 per cent for the third quarter of this fiscal.
The SBI report cites as many as 30 high-frequency indicators that are not as robust as they were in the previous quarters. For instance, banking, financial services and insurance (BFSI) have shown that operating profits grew by 9 per cent in the third quarter, which is just half of the 18 per cent recorded in the year-ago period.
Soumya Ghosh said he expects an upward revision in growth to 7 per cent for the full fiscal, up from the 6.8 per cent projected earlier. This is because the government is anticipated to revise the GDP numbers for FY20, FY21, and FY22 on February 28. Additionally, there will be revisions in quarterly numbers of FY20, FY21, FY22, and even for the Q1 and Q2 of FY23.
As per the report, corporate margin seems to be under pressure as reflected in the results of around 3,000 listed companies, excluding financial services companies, due to higher input costs with decreasing margins. Margins declined from 15.3 per cent in Q3 of FY22 to 11.9 per cent in Q3 of FY23, and this could pull down manufacturing growth in Q3.
Meanwhile, India Ratings has predicted in a report that the GDP will expand 5.9 per cent in FY24, which is less than most other predictions.
According to PTI, India Ratings said although there are some encouraging signs for growth, including sustained government spending, deleveraged businesses, low non-performing assets, a production-linked incentive programme, and possibly rising commodity prices globally, they are still insufficient to push GDP growth past 6 per cent in FY24.
The principal economist at India Ratings Sunil Kumar Sinha said that another reason is the falling merchandise exports due to the global slowdown and merchandise imports not moderating proportionately.
The report highlighted that due to the K-shaped recovery, which is not allowing for a broadening of consumer demand or assisting with wage growth, particularly for the population in the lower half of the income pyramid, industrial growth is projected to remain modest.
In FY24, the industrial sector is expected to rise by 3.9 per cent instead of 4.1 per cent. On the other side, the main part of the GDP, services, is forecast to rise 7.3 per cent this year versus 9.1 per cent in FY23, the report added.