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October-December GDP to be out today: What experts predicted


Gross domestic product (GDP) data for the October-December 2022 quarter (Q3FY23) will be released by the government on Tuesday. The first quarter (April – June) of the current financial year recorded double digit growth of 13.5 per cent. The GDP moderated to 6.3 per cent in the second quarter from July – September. LiveMint reported that economists have projected moderation in the growth momentum for Q3 due to uneven economic activity during the period. However, the agriculture sector may show improvement. The Q3 growth rate will be a key factor in Tuesday’s market sentiment.

What experts estimate:

A poll of 20 experts predicted that the growth slumped to 4.7 per cent in Q3, the report said.

Radhika Rao, an economist at DBS Bank, said the growth data may indicate “further strengthening in the growth momentum”.

According to the managing director of Resurgent India, Jyoti Prakash Gadia, the Q3 GDP numbers would range from 4 – 4.5 per cent due to global uncertainties and sticky core inflation. Major economies of the world are also expected to follow the spiralling trend which will affect India, too.

Impact of MSCI’s index tweaks on India:

Jyoti told Mint that the overall growth prospects for the year may range from 6.5 – 7 per cent. The ‘base effect’ will have a role to play in shaping the Q3 and Q4 rates, leading to growth expectations. The upcoming financial year could record a better growth expansion due to improvements in infrastructure and logistics development encouraged by the government.

The Investment Information and Credit Rating Agency (ICRA) has projected a base effect-led moderation of year-on-year (YoY) GDP growth in Q3 at 5.1 per cent. With the strengthening of the services sector, GDP growth over the pre-Covid levels is set to rise again to 11.6 per cent in Q3 compared to the 7.6 per cent of Q2.

“Economic activity in Q3 FY2023 remained distinctly uneven, amid the upsides offered by the robust demand for contact-intensive services and upbeat sentiment during the festive season. Amid continuing input price pressures for certain sectors, we project the GDP growth in Q3 FY2023 at 5.1%,” said Aditi Nayar, chief economist, Head-Research & Outreach, ICRA Ltd.

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A healthy revenue spending and base effect-led contraction in capital spending defined Indian government spending trends. While exports in the services sector expanded by 25 per cent YoY, non-oil merchandise exports declined by 8.2 per cent.

The yearly rise in gross value added (GVA) at basic prices (at constant 2011-12 prices) is expected to moderate to 4.9 per cent in Q3 from 5.6 per cent from the last quarter.

While the growth in the services sector would display a base-effect led moderation (to +7.4% from +9.3%, respectively), it would surpass the rise in agriculture, forestry and fishing (+4.0% in Q3) and industry (+1.0% in Q3), ICRA said.

Although the YoY growth of the combined revenue expenditure of 22 state governments fell to 5.4% in Q3 from 15.9% in Q2, the non-interest revenue expenditure increased by 13.4% in Q3 after a contraction of 1.4% in Q2. This was due to the higher release of subsidies, mostly in the fertiliser segment.

Improvements in the output of capital goods (to +8.8% from +6.9%) and infrastructure/construction goods (to +7.3% from +5.3%) and Rs. 6.6 trillion worth project announcements in Q3, up from Rs. 4.4 trillion in Q2 showed that the investment sector in Q3 was robust.

According to ICRA, growth in four sectors – manufacturing (to -3.0% from -4.3%), mining and quarrying (to +5.0% from -2.8%), electricity, gas, water supply and other utilities (to +7.0% from +5.6%) and construction (to +7.0% from +6.6%) may lead to a ~1.0% YoY growth in industrial gross value added (GVA) for Q3 FY2023. This comes after the slight downtick of 0.8% in the second quarter.

A slowdown in external and internal demand for consumer durables and dip in output for products like textiles, leather products, and electrical equipment led to restricted manufacturing in Q3. However, the automobile industry saw an uptick in demand during the festive season. The prices of commodities remained significantly higher than the previous year even as a few segments faced margin pressure in Q3, which is likely to have impacted GVA growth.

According to the mixed trends of Kharif crop production, with a YoY spike in sugarcane, cotton, coarse cereals and oilseeds, and a decrease in rice and pulses, in the second advance estimates for FY2023, ICRA has projected GVA growth in agriculture at 4 per cent for Q3. This is a marginal decrease from 4.5-4.6 per cent of Q1 and Q2.

The Reserve Bank of India (RBI) had projected the real GDP growth for 2022-23 at 6.8 per cent and while Q3 estimates slowed to 4.4 per cent.

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