By India Today Business DeskIndia’s GDP numbers for the October-December quarter will be released by the government today. The data, considered an important indicator of the country’s growth in the ongoing financial year, will be released by the National Statistics Office (NSO) later in the day.
Experts predict a moderation in GDP growth in the third quarter on account of a demand slowdown, triggered by the Reserve Bank of India’s aggressive rate hikes and policy tightening to control inflation.
It may be noted that the RBI has hiked the key rates by 250 basis points since May 2022 to bring inflation under control. This has made borrowing more expensive, leading to slower growth in demand. And an increase in retail inflation in January indicates that the central bank will not shy away from hiking interest rates in its April policy review.
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Experts on Q3 GDP growth
A poll of economists conducted by news agency Reuters indicated that India’s economy probably grew at 4.6 per cent year-on-year during the third quarter, much slower than the 6.3 per cent growth seen in the previous quarter. However, it is in line with the government forecast of 7 per cent growth for FY23.
The economists also indicated that a sharp fall in year-on-year growth rate is partly due to a fading of the pandemic-induced base effect which had contributed towards higher growth in FY22.
Shilan Shah, emerging market economist at Singapore-based Capital Economist said in a note last week, that there are signs that “higher interest rates are feeding through to the real economy”.
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Shah expects the economy to grow at 4.3 per cent year-on-year in the quarter ended December 2022.
Meanwhile, the median forecast from the Reuters survey of 42 economists indicated that the GDP could slow to 4.4 per cent in the final quarter of FY23, resulting in an average 6 per cent growth in the full financial year. This is below the government and central bank’s estimates.
Gaura Sen Gupta, economist at IDFC First Bank Economic Research, said growth recovery has held up with consumption supported by the urban demand and gradual improvement in rural demand. IDFC First Bank Economic Research predicted GDP growth for the third quarter at 5 per cent.
Barclays India economist Rahul Bajoria agrees with the other economists, indicating that the economy would have grown marginally below 5 per cent in Q3FY23.
“For FY24, we continue to expect a soft landing as tighter monetary conditions and still-elevated inflation take a toll. We continue to see growth moderating to 6 per cent and forecast steady GDP growth of 6.5 per cent in FY25,” Bajoria told news agency PTI.
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