India’s GDP growth in Q1 FY24 to touch 8.3% as compared to RBI’s estimate of 7.8%: SBI Ecowrap

India’s GDP growth in Q1 FY24 will stand at 8.3 per cent as compared to the Reserve Bank of India’s (RBI) estimate of 7.8-8.0 per cent, noted the latest State Bank of India’s Economic Research Department’s report, SBI Ecowrap.  The report added that total FY24 growth will be higher than 6.5 per cent.

The International Monetary Fund (IMF) had projected India’s growth at 6.1 per cent in 2023, a 0.2 percentage point upward revision compared with the April projection, due to stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment.

SBI's report noted that despite headwinds, economic activity in India remained resilient in the April-June quarter of FY24, driven mainly by the growth in the services sector.

"Gross fixed capital formation (GFCF) and industrial production have slowed sharply or contracted in major advanced economies, dragging international trade and manufacturing in emerging markets as a corollary. The balance of risks to global growth remains tilted to the downside as extreme climatic events and enhanced geopolitical tension upend the drivers of risk multifold," SBI's Ecowrap said.

The SBI composite leading indicator (CLI) Index (a basket of 43 leading indicators that includes parameters from almost all the sectors) based on monthly data shows continued positive economic activity in Q1FY24, compared to Q4FY23.

“In Q1 FY24, manufacturing is sustained as reflected in IIP, automobile sales, PMI data. Further, the agriculture sales has been strong along with a high power supply. In the service side, passenger traffic picked up in Q4 FY23 has sustained, Air cargo traffic increased,” the report noted.

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The report further said that in Q1 FY24, Indian Inc. reported top-line growth of around 3 per cent, while EBITDA and PAT grew by more than 30 per cent, as compared to the numbers in the same quarter last fiscal. The sectors that performed well were banks, auto, IT, Pharma, FMCG, refineries, etc.

Corporate results for Q1 FY24, ex BFSI, represented by more than 3,000 listed entities, show almost a flat topline.

The EBITDA margins of more than 3,000 companies improved by 274 bps to 15.81 per cent in Q1 FY24 as compared to 13.07 per cent in Q4 FY23, and 12.60 per cent in Q1 FY23 due to low input prices.

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Earlier in the day, the Department of Economic Affairs, in its July Monthly Economic Review report, said that inflationary pressures have “re-emerged”, driven primarily by global disruptions, along with domestic factors.

The report noted that the evolving inflation trends call for greater vigilance by the Centre and the RBI.

“Going forward, while domestic consumption and investment demand are expected to continue driving growth, global and regional uncertainties and domestic disruptions may keep inflationary pressures elevated for the coming months, warranting greater vigilance by Government and the RBI,” it added.

The report noted that retail inflation could remain high for the next few months, but the “uneasiness in food inflation is likely to subside”.

It went on to highlight that disruptions on the global front led to high inflation in India, with specific food commodities such as cereals, pulses and vegetables, mainly driving the increase. All these categories exhibited double-digit growth in July, compared to the corresponding period last year.

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