(Reuters) – India’s economic growth accelerated to 6.1% in the March quarter from a year earlier as a recovery in private investment and domestic consumption offset the drag from softening global demand.
Asia’s third-largest economy expanded faster than the forecast of 5.0% by economists in a Reuters poll in the last quarter of the fiscal year 2022/23, up from revised 4.5% in the previous quarter, government data showed on Wednesday.
The full-year growth estimate was revised to 7.2%, above earlier estimate of 7%.
COMMENTARY
PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI
“March 2023 quarter GDP growth surprised positively at 6.1% YoY vs our 5.4% estimate. In sequential, seasonally adjusted annualized terms, the economy picked up to 10%, helped by most segments on the supply side. Meanwhile, investments and net exports played a key role on the demand side of GDP. This growth has come in spite of higher interest rates and weaker real income growth. Both parameters are likely to see improvement in the quarters ahead which should help sustain the robust pace of activity.”
SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI
“The main reason for the better-than-expected performance has been significant traction in fixed investment and exports on the demand side and construction and trade, hotel & hospitality on the supply side. Private consumption remains the main source of disappointment.”
“Going forward, we expect India’s growth to remain around 6% for the financial year ending March 2024. Despite the likely slowdown during the current financial year, we expect at least modest pickup in private consumption demand. The compulsions of fiscal consolidation can depress final consumption demand by government. Barring better-than-expected acceleration in private capital expenditure, we would also expect deceleration in the growth of fixed investment.”
DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS, MUMBAI
“4QFY23 growth is supported by sharp decline in import growth. However, worrying trend is weak growth performance of PFCE, which has grown just 2.8%, second-lowest growth in fourth quarter after 4QFY20. With inflation declining from here, we expect private final consumption expenditure growth will provide support to GDP growth.”
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
“The GDP expansion in Q4 FY2023 was appreciably higher than expected, while remaining uneven and confirming the hopes of a sequential pickup in the pace of growth of economic activity to 6.1% from the bottom of 4.5% seen in Q3 FY2023.”
“ICRA projects growth of real GDP in FY2024 at 6.0%, with a downside risk of up to 50 bps in the event that an El Nino affects the monsoon rains. At the same time, frontloaded capex by the government of India and the states, and a rapid execution of infra projects could provide an upside to our GDP estimates for the fiscal. We foresee the nominal GDP growth at 10.0% for FY2024.”
“Inflation is expected to moderate in FY2024 relative to FY2023, which is a positive for household budgets and consumption. However, the rise in home loan EMIs and its impact on the budgets of urban households and their consumption demand, contraction in exports and their impact on employment, and the impact of a potential El Nino on crops, food prices and farm incomes remains to be seen.”
MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL, MUMBAI
“Weaker private consumption is still a worry albeit looks a bit difficult to fathom, when one compares robust value added growth of consumption sectors like trade, hotels, transport, communication services.”
“Another anomaly was a big discrepancy print in Q4GDP along with the big gap between GDP and GVA growth, with GVA growth outdoing GDP with a wide margin, depicting net indirect taxes (adjusted for subsidies) de-grew. That said, overall a healthy growth print augurs well and also validates the fact that India’s growth momentum is sustained well in FY23.”
VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI
“The higher-than-expected GDP growth in Q4 FY23 is a pleasant surprise and seems to have been driven by broad-based improvement in domestic drivers of private consumption, public consumption, and investments. Narrowing of external trade deficit also provided comfort. Clearly, the usual financial year-end growth momentum received a boost from a sharp decline in input price inflation along with higher government spending. Lead indicators for April 2023 are pointing towards continuation of growth momentum. While this is encouraging, the anticipated global economic slowdown and lagged impact of past aggressive monetary tightening by the Reserve Bank of India is likely to manifest in a lower headline GDP growth number of 6.0% in FY24 vis-a-vis 7.2% in FY23.”
SUMAN BANNERJEE, CHIEF INVESTMENT OFFICER AT HEDONOVA, PARIS
“The rupee has shown relative weakness against the dollar over the past year, while there’s been a significant upsurge in export volumes. Moreover, we have been able to decrease our oil import expenses due to our advantageous ties with Russia.”
“This scenario has resulted in a decrease in the balance of payments account, thus contributing to a boost in GDP. I am also inclined to agree with the projected 7% growth for the forthcoming year. The RBI has performed admirably by controlling inflation and maintaining relatively lower interest rates.”
“An environment characterized by moderate inflation and low interest rates fosters business activities, which I believe will contribute to a GDP growth of 7.5% in the coming year.”
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
“The GDP growth surprised (by being) significantly higher than expected for the fourth quarter, taking the full-year number to 7.2% in 2022-23. Growth was led by higher-than-expected agriculture growth and strong growth in services. The GDP data does validate the recent growth optimism for India, despite global headwinds. This is not to say that the growth outlook is without risks – particularly in regards to the monsoon progress and recession risks globally. We expect GDP growth at 5.8%-6% for FY24 with some upside to this forecast now emerging.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
“India’s Jan-Mar23 GDP growth posted a sharp upside surprise, amongst the strongest lift for the quarter in Asia and displaying resilience in the face of negative terms of trade shock as well as a difficult global geopolitical backdrop last year. There was broad-based lift amongst the segments, especially stronger outturns by farm and services output. On the expenditure end, capital formation was one of the key support pillars, while private consumption grew at a more moderate pace. Double-digit nominal GDP growth of 16% was supportive of deficit and debt-to-GDP ratios. A strong GDP beat will provide the central bank headroom to extend its pause in June.”
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
“The sharp upside to the GDP growth suggest the resilience of the Indian economy despite the global slowdown. However, we remain watchful on the sustainability of the strength especially when much of the non-agricultural growth has been led by public investment while consumption remain tepid.”
(Reporting by Rama Venkat, Nishit Navin Navamya Ganesh Acharya, Chris Thomas, Nandan Mandayam, Ashish Chandra, Meenakshi Maidas in Bengaluru; Editing by Eileen Soreng and Sonia Cheema)
