India’s GDP To Grow Up To 6.9% In Q3FY24: SBI

In contrast to the prevailing global pessimism, consumer confidence in India has further strengthened, primarily fueled by optimism regarding the overall economic outlook and employment prospects

A leading economist from the State Bank of India (SBI) has projected India's Gross Domestic Product (GDP) to grow within the range of 6.7-6.9 per cent during the third quarter of the financial year 2023-24. In the recent report, Soumya Kanti Ghosh, Group Chief Economic Advisor, stated, “Factoring the slight decline in economic activity in Q3 FY24, we estimate that the GDP should grow in the range of 6.7 to 6.9 per cent with a gross value added (GVA) growth of 6.6 per cent.”

The SBI Composite Leading Indicator (CLI) Index, which comprises 41 leading indicators covering various sectors, indicates a slight moderation in economic activity in Q3. Ghosh notes that these estimates align with the SBI-ANN (Artificial Neural Network) model, which incorporates 30 high-frequency indicators. The ANN model has been trained using quarterly GDP data from 2011Q4 to 2020Q4, demonstrating precise forecasting performance during the training period.

In contrast to the prevailing global pessimism, consumer confidence in India has further strengthened, primarily fueled by optimism regarding the overall economic outlook and employment prospects. Ghosh noted that various business surveys also indicate a significant uptick in business optimism. 

Corporate India has sustained its impressive performance, driven by a noticeable acceleration in consumption trends across urban and rural areas. Corporate results from approximately 4,000 listed entities for Q3FY24 reveal robust growth, with EBIDTA and profit after tax (PAT) both surging by more than 30 per cent, while the top line saw an increase of approximately 7 per cent compared to Q3FY23, according to the SBI report.

Additionally, there was a notable improvement in margins reported by listed entities, evident in the results of approximately 3,000 listed entities, excluding the banking, financial services, and insurance (BFSI) sector. The aggregate EBIDTA margin stood at 14.95 per cent during Q3 FY24, compared to around 12 per cent in the same period of the previous year.

Ghosh highlighted that Corporate Gross Value Added (GVA), measured by EBIDTA plus employee expenses, witnessed robust growth of approximately 26 per cent in Q3 FY24 compared to Q3 FY23.

According to the First Advance Estimates, the projected production of major Kharif crops for 2023-24 is 148.5 million metric tons (MMT), marking a decline of about 4.6 per cent from FY23.

“While the sowing season for Rabi crops that concluded on February 23, indicates a slight increase in overall acreage compared to the previous year. However, concerns arose over the sown area under cereals, which saw a decline of 6.5 per cent from the previous year,” Ghosh said.

If the Rabi output fails to compensate for the Kharif shortfall, agriculture may experience some moderation, resulting in a decline in value-added in the sector. However, there has been a rapid growth in inland fish production from 2014-15 to 2022-23, reaching 131.13 lakh tonnes in 2022-23. The fisheries sector's contribution to the total national GVA is approximately 1.07 per cent, and to agricultural GVA, it's about 6.86 per cent.

This growth in the fisheries sector may support the overall development of the agriculture and allied sectors in FY24, indicated Ghosh in the report.