Agriculture is expected to grow 3% against 4.5% in Q1FY23, stated a research note by Jahnavi Prabhakar, economist at Bank of Baroda. This comes against the backdrop of above normal South-West monsoon, with marginally lower kharif sowing this year, she said.
However, untimely heavy rainfall in the states across northwest and central India between end-September and mid-October, is likely to have added to the moisture levels of the standing crop, which poses some downside risks to the kharif output relative to the first advance estimates, cautioned Nayar, who forecasts agri-GVA growth at 2.5%.
Growth in manufacturing volumes was modest, dragged down by the weak external demand, and subdued domestic demand for consumer durables amidst elevated input costs and fuel inflation, Nayar said. While the revenues of listed corporates were favourable in Q2 FY23, the tentative volume growth limited their ability to transmit the pain of higher costs into output prices, resulting in a compression of margins by a varied extent across sectors in that quarter, she said. ICRA projects manufacturing GVA growth to dip to about 3% in Q2 FY23 from 4.8% in Q1 FY23.
Electricity is expected to clock a growth of 5% in Q2FY23 compared with 14.7% in Q1FY23, according to Prabhakar’s estimates.
The construction sector will continue to grow at a solid pace on the back of steady demand, Prabhakar said.
For services, on the other hand, revival in pent-up demand is expected to boost the hospitality sector, resulting in much higher growth in trade, hotel transport and communication sector, according to Prabhakar’s estimates.
The high-frequency indicator for Q2FY23 has been impacted by back of base effect and hence needs to be read with caution when compared with previous quarters, Prabhakar cautioned.