Q1 GDP preview: India Q1 GDP print may beat RBI MPC forecast
RBI) Monetary Policy Committee (MPC), supported by healthy government capital expenditure, improved investment activity and the low base of the same quarter last year. Experts point out that the statistical effect of a dip in trade deficit and the deflation method used to compute GDP may also boost the figures.
India's real GDP in the quarter ended March 2023 had grown at 6.1 per cent as compared to the year-ago period. Rating agency ICRA has projected the year-on-year (YoY) growth of the GDP to improve to 8.5 per cent in Q1FY24 from 6.1 per cent in Q4FY23, boosted by the supportive base of the same quarter last year, which saw the Indian economy normalising after the Covid-19 pandemic.
ICRA expects the GVA (gross value added) growth at 8.1 per cent in Q1FY24 against 6.5 per cent in Q4FY23), driven by the recovery in the services sector (+9.7 per cent versus +6.9 per cent). "Economic activity in Q1FY24 was boosted by a continued catch-up in services demand and improved investment activity, particularly a welcome front-loading in government capital expenditure.
Moreover, sharply lower prices of various commodities on a YoY basis supported margins in some sectors. However, unseasonal heavy rains, the lagged effect of the monetary tightening and weak external demand exerted downward pressure on GDP growth," said Aditi Nayar, Chief Economist, Head of Research and Outreach at ICRA.
"We peg GDP growth in Q1FY24 at 8.5 per cent, exceeding the Monetary Policy Committee’s (MPC’s) forecast of 8 per cent. However, we are circumspect that erratic rainfall, narrowing differentials with year-ago commodity prices, and a possible slowdown in the momentum of government capex as we approach the parliamentary elections, could dampen GDP
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