The Indian economy is on track to surpass 7 per cent growth rate in Fiscal Year 2023 with manufacturing being the key driver, according to a report released by the State Bank of India.
State Bank of India’s research report, Ecowrap released on Friday said that India’s growth in the fourth quarter of FY23 is likely to be 5.5 per cent, which would lead to the country’s growth for FY23 at 7.1 per cent. This is in line with the advance estimates released by the National Statistical Office (NSO) in January that pegged growth for the year ended March 31, 2023, at 7 per cent.
According to Ecowrap the variegated patterns of growth emerging across the globe is bringing forth unprecedented challenges before policymakers, regulators and economists in assessing the real rates of projected growth, not only during the current year — 2023 — but continuing through 2024 and 2025 as the inflation trajectory management for central banks has been elongated after the surprising turn of events last year.
Amidst this global hullabaloo, the SBI Research report said India is expected to continue its showdown in pursuing a different pathway of zeroing in on drivers of growth, looking for a renewed surge in resilient manufacturing while supporting services sector to embrace enhanced efficiency.
Locally, domestic consumption and investment stand to benefit from stronger prospects for agricultural and allied activities, strengthening business and consumer confidence, and strong credit growth while supply responses and cost conditions are poised to improve as inflationary pressure is easing, the report said.
The Union Budget 2023-24’s emphasis on capital expenditure is expected to crowd-in private investment, strengthen job creation and demand, and raise our growth potential, the report said.
RBI has estimated Q4FY23 Real GDP growth to be 5.1 per cent and full year FY23 estimates by National Statistical Office (NSO) is 7 per cent. For 2023-24, RBI is projecting GDP growth at 6.5 per cent with the first quarter (Q1) pegged at 7.6 per cent.
SBI’s ANN (Artificial Neural Network) model, based on 30 high-frequency indicators from key sectors, and tuned/trained to project the GDP numbers forecasts the quarterly GDP growth for the fourth quarter of fiscal 2022-23 (Q4FY23) at 5.5 per cent, the SBI Research Ecowrap said. It added at this rate, India’s GDP growth for FY23 is likely at 7.1 per cent.
World Economic Outlook (WEO) report from International Monetary Fund (IMF) in April 2023 revised the baseline growth forecast from 3.4 per cent in 2022 to 2.8 per cent in 2023, before settling at 3 per cent in 2024. The report said advanced economies (AEs) are expected to see an especially pronounced growth slowdown, from 2.7 per cent in 2022 to 1.3 per cent in 2023.
Global headline inflation in the baseline case is set to fall from 8.7 per cent in 2022 to 7 per cent in 2023 on the back of lower commodity prices though underlying (core) inflation is likely to decline more slowly, the report said.
Meanwhile, India Inc continues to front lead the economic turnaround while embracing better operational and financial efficiency, the SBI Research Ecowrap said. It added in Q4FY23, around 1,700 listed entities reported top line growth of 12, while PAT grew by around 19 per cent as compared to the same period previous year. It added the same set of companies reported earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of around 23 per cent in Q4FY23.
