India’s GDP growth may dip to 6.5% YoY in Q2 FY2023: ICRA

However, the growth in the GDP over the pre-COVID levels is expected to double to around 8 per cent in Q2 FY2023 relative to the 3.8 per cent seen in the previous quarter, with a widening of the economic recovery. ICRA estimates a subdued trend for industry (+2.0 per cent).

India’s GDP and gross value added (GVA) have been projected at 6.5 per cent and 6.3 per cent for Q2 FY2023, respectively, by ICRA. This is a base effect-led halving from the 13.5 per cent and 12.7 per cent, respectively recorded in Q1 FY2023. However, the growth in the GDP over the pre-COVID levels is expected to double to around 8 per cent in Q2 FY2023.

“Economic activity in Q2 FY2023 benefitted from robust demand for contact-intensive services, healthy capital spending by the government of India (GoI), and pre-festive season stocking of goods. On balance, we project the GDP growth in Q2 FY2023 at 6.5 per cent, somewhat higher than the Monetary Policy Committee’s (MPC’s) September 2022 forecast of 6.3 per cent for that quarter,” said Aditi Nayar, chief economist, ICRA Ltd.

The combined revenue expenditure (revex) of the 24 state governments for which data is available, posted a considerable YoY growth of 16.7 per cent in Q2 FY2023. However, the GoI’s non-interest revenue expenditure contracted by 1.4 per cent in Q2 FY2023.

The growth in manufacturing volumes, as indicated by the IIP data, in Q2 FY2023 was modest at 1.4 per cent relative to the year-ago levels, dragged down by the weak external demand, and subdued domestic demand for consumer durables amidst elevated input costs and fuel inflation.

While the revenues of listed corporates were favourable in Q2 FY2023, 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. ICRA projects the YoY growth in manufacturing GVA to dip to ~3 per cent in Q2 FY2023 from 4.8 per cent and 5.6 per cent, respectively, in Q1 FY2023 and Q2 FY2022.

Fibre2Fashion News Desk (NB)