Inconsistent monsoons, weak rural consumption could slow economic growth: SBI Caps

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agriculture sector downwards, SBI Caps said in the report. "Further, private consumption expenditure’s share has marginally dipped. The risk here stems from rural consumption," it said.

“As lower crop production feeds into lower rural incomes, this could slow down consumption – some FMCG majors have already raised such concerns." The Indian economy grew 7.8% in the April-June quarter, led by higher government and private capital expenditure and strong services growth, according to government data released on Thursday. Real GDP at constant (2011-12) prices for the June quarter is estimated to reach ₹40.37 trillion, marking a 7.8% expansion from ₹37.44 trillion a year ago, according to the ministry of statistics and programme implementation (MoSPI). Nominal GDP or GDP at current prices is estimated at ₹70.67 trillion, reflecting an 8% increase from ₹65.42 trillion in the year-ago quarter, the ministry said.

The SBI Caps report highlighted that selective growth in specific sub-sectors meant that manufacturing grew by just 4.7% annually during Q1FY24. "The solid GFCF growth of 8%, which meant it contributed a towering 35% of GDP in Q1, along with growth in select infra-input sectors indicates that the government push for infrastructure building through capex is acting as a driving force for the economy," the report said. "The flipside is that this capex is not crowding in non- government investment, as indicated by tepid bank loan growth to the infrastructure segment, and languid FDI inflows," it added.