Latest Economic Assessment

• India’s GDP growth projected to have eased to 6.7% in Q4 of fiscal year 2023-24, according to ICRA.
• Reflects challenges in the industry and services sectors, and a continuing contraction in agriculture.
• Despite the slowdown, the annual average growth rate for the year is expected to be a robust 7.8%.

Quarterly Performance and Annual Projections

• National Statistical Office (NSO) will release official national income estimates for the year on May 31.
• NSO had previously anticipated 7.6% GDP growth for the fiscal year, with a 5.9% increase for Q4.
• ICRA’s projections suggest slightly higher Q4 growth at 6.7%, assuming no revisions to the first nine months’ growth data.
• Gross Value Added (GVA) growth for Q4 was estimated at 5.7%, down from 6.5% in Q3.
• Weaker performance in both industrial and services sectors: industry GVA growth slowed to 7.9% from 10.4% in Q3; services softened to 6.2% from 7%.

Sector-Specific Insights

Agriculture

• GVA contracted for the second consecutive quarter, shrinking by 0.5% in Q4 after a 0.8% decline in Q3.
• Driven by weak rabi crop outputs (except wheat) and yield-related issues.

Industry and Services

Lower volume growth and reduced commodity price gains affected profitability in some industrial sectors.

Positive Signs

Domestic retail tractor volumes expanded by 7.7% year-on-year in Q4 after a 4% contraction in Q3.

Some listed FMCG players reported improvements in the rural economy, particularly in the non-food segment.

The easing of GDP growth to 6.7% in Q4 reflects underlying challenges in key sectors. Overall economic performance for the fiscal year remains strong with an expected average growth rate of 7.8%. Upcoming NSO data will provide further clarity and confirmation of these trends. ICRA’s insights highlight the need to address sector-specific issues to sustain and enhance growth momentum in the coming quarters.