India’s Q2FY23 GDP Growth: India’s GDP data for the July-September 2022 quarter will be released today (on Wednesday) at 5.30 pm. Analysts expect India’s gross domestic product to have grown in the range of 5.8 per cent and 7.2 per cent during the second quarter of 2022-23, which is lower than the previous quarter.
Also Read: India’s Q2 GDP Data: Here Is What Various Estimates Say
Most analysts have revised downwards their GDP forecasts due to global economic headwinds and tightening global financial conditions. India’s gross domestic product (GDP) rose 13.5 per cent in the June 2022 quarter (Q1FY23). In the September 2021 quarter, the Indian economy had expanded by 8.4 per cent. Here’s what you need to watch out for in the latest GDP numbers:
Manufacturing Growth/ Industrial Sector In Q2FY23
Manufacturing was hit significantly during the coronavirus pandemic and then due to the Russia-Ukraine war contracting 0.2 per cent in the March 2022 quarter. Now, in the Q2FY23, manufacturing growth based on IIP was a modest 1.4 per cent, dragged down by the weak external demand, and subdued domestic demand for consumer durables amidst elevated input costs and fuel inflation, ICRA Chief Economist Aditi Nayar said.
Soumya Kanti Ghosh, group chief economic adviser of SBI, also said Q2 manufacturing sector growth is likely to be weak on the back of margin compression. “For example, corporate results, excluding BFSI, for Q2FY23 shows degrowth in EBIDTA by 14 per cent y-o-y as against 35 per cent Ebitda growth in Q2 FY22, though the topline continued to grew at a healthier pace.”
Agriculture Sector Growth In Q2
Icra expects agriculture GVA growth at a modest 2.5 per cent for Q2 FY23, based on the first advance estimates of crop production. “Untimely heavy rainfall in states across northwest and central India at the fag end of the monsoon season may have an adverse effect on crop output vis-a-vis estimates,” it said in a report.
Services Sector Growth In Q2
Travel-related services, which got significantly hit during the COVID-19 pandemic due to the lockdown, have recorded a healthy recovery since the onset of FY23. It is now benefitting from pent-up demand related to corporate travel and increasing confidence in availing leisure services amid the decline in the trajectory of pandemic infections, Icra said in the report.
The ratings agency estimates the sectoral growth in Q2 to be driven by the services sector (9.4 per cent), with a subdued trend foreseen for the industry (2 per cent), and agriculture, forestry and fishing (2.5 per cent).
Consumption Growth In Q2FY23
Private final consumption expenditure is the largest component accounting for about 60 per cent of the GDP, and its movement has a huge weightage on the entire GDP number.
Crisil Chief Economist Dharmakirti Joshi sees stronger domestic demand driving growth premium over peers in the medium-term on the back of optimistic investment prospects given the government’s capex push, the progress of production-linked incentive scheme, healthier corporate balance sheets, and a well-capitalised banks with low NPAs.
“We have revised down our forecast for real gross domestic product growth to 7 per cent for fiscal 2023 from 7.3 per cent, primarily because of the slowdown in global growth that has started to impact our exports and industrial activity. This will test the resilience of domestic demand,” Joshi said in a note.
Investments And Infrastructure In Q2
Gross fixed capital formation (GFCF), given as part of the GDP data, is an indicator of investment activity in the country. A growth in GFCF indicates a jump in investment in the country.
Icra said investment-related indicators such as the output of capital goods, infra/construction goods, aggregate capital outlay of 24 state governments and the gross capital expenditure of the central government displayed a healthy performance in Q2 FY23.
For the second quarter of the current financial year 2022-23, SBI has given the lowest growth forecast at 5.8 per cent while India Ratings has given the highest forecast at 7.2 per cent.
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