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India's GDP Growth Likely Dipped to 6.5% in Q3 FY24, Economists Say

New Delhi : India's economic growth is expected to have moderated to 6.5% in the third quarter of the 2023-24 fiscal year (October-December), according to a Moneycontrol survey of 10 economists. This marks a decline from the 7.6% growth recorded in the previous quarter.

Key Takeaways:

  • Economist Predictions: The survey suggests a wide range of forecasts for Q3 GDP growth, ranging from 6.0% (ICRA) to 7.0% (IndusInd Bank).

  • Factors Affecting Growth: Lower industrial output, subdued investment activity, and uneven monsoon are seen as key drags on growth.

  • Positive Signs: Despite the slowdown, some sectors like agriculture and services may see improved performance.

  • Comparison to Forecasts: The Reserve Bank of India (RBI) currently predicts Q3 growth at 7%, while the government's first advance estimate pegged it at 7.3%.

Detailed Analysis:

  • Industrial Growth: Industrial production, as measured by the Index of Industrial Production (IIP), averaged 5.9% in Q3, down from 7.8% in the previous quarter. Manufacturing output growth also slowed down from 6.8% to 5.1%.

  • Agriculture: Agricultural growth is expected to accelerate to over 2%, compared to 1.2% in Q2, the lowest in four and a half years.

  • Services: The services sector is also projected to see higher growth compared to 5.8% in Q2, supported by the festive season and the ICC World Cup held in India.

  • Investments: While government capital expenditure maintained growth, spending by 25 state governments declined.

Expert Opinions:

  • Aditi Nayar, Chief Economist at ICRA, expects growth to be lower than the consensus at 6.0%, attributing it to various factors like lower industrial volume growth and slowdown in government expenditure.

  • Rahul Bajoria, Managing Director at Barclays, emphasizes that the moderation should be viewed in the context of elevated growth of 7.7% in the first half of FY24.

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