India Q1 GDP Preview: A Resilient Quarter


In terms of the sectoral breakdown, agricultural production and demand for rural goods is expected to stay resilient despite some weather-related issues and higher costs, according to Rahul Bajoria, chief economist at Barclays, who forecasts agricultural growth at 3%.

Teresa John, economist at Nirmal Bang Institutional Equities, forecasts agriculture and allied sector growth to come in at 2% on lower wheat output, although prices have been supportive.

Industry, excluding construction, is likely to grow 2.2% annually in the quarter on a high base, according to John’s estimates. The manufacturing sector’s growth may decline 0.5% annually, weighed down by margin pressure, she said.

According to Bajoria, even the manufacturing and electricity segments are likely to witness double-digit growth as strong exports, coupled with an unusually hot summer added to demand for electricity. This expected jump in manufacturing, he said, comes despite relative underperformance in the auto sector, expected to continue to revive through H2 2022.

Services, including construction output, are likely to grow 17.4% annually during the quarter, with recovery in contact-intensive services being supported by a low base in Q1 FY22 on account of the second Covid wave, John said.

ICRA expects the growth in GVA of trade, hotels, transport, communication and services related to broadcasting to record a base-effect driven expansion of about 40-45% in Q1 FY23, while trailing the pre-Covid level of Q1 FY20 by a muted 2.5%.

The recovery in travel-related services has been upbeat since the onset of FY23, benefitting from pent-up demand related to corporate travel and increasing confidence for availing leisure services amid the decline in trajectory of Covid-19 infections, Nayar said. Moreover, within transportation, the railway and road sub-sectors are expected to post a healthy recovery in Q1 FY23, as indicated by the healthy annual growth in rail freight and GST e-way bills, she said.

The government’s non-interest revenue expenditure recorded a mild annual growth of 3.5% in Q1 FY23. But the combined revenue expenditure of the 23 state governments, for which data is available, posted a considerable annual expansion of 13.1% in Q1 FY23. As a result, ICRA projects GVA growth of public administration, defence and other services at about 14% in Q1 FY23.


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