ICRA projects India’s GDP growth at 13% for Q1 FY23
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ICRA in its latest report has projected India’s Gross Domestic Product (GDP) growth at 13.0% for first quarter (April-June) of current fiscal year (FY23) a sharp jump from the 4.1% in Q4 FY22. It has also projected the year-on-year (YoY) growth of the gross value added (GVA) at basic prices (at constant 2011-12 prices) in Q1 FY23 at 12.6%, a jump from 3.9% recorded in Q4 FY22. Aditi Nayar, Chief Economist, ICRA said ‘the anticipated double-digit GDP expansion in Q1 FY23 benefits from the low base of the second wave of Covid 19 in India in Q1 FY22 as well as the robust recovery in the contact-intensive sectors following the widening vaccination coverage.
As per the report, the sectoral growth in Q1 FY23 to be driven by the services sector (+17-19%; +5.5% in Q4 FY2022), followed by the industry (+9-11%; +1.3%). However, the GVA growth in agriculture, forestry and fishing is projected to decline to around 1.0% in Q1 FY2023 from 4.1% in Q4 FY2022, on account of the adverse impact of the heat wave in several parts of the country, which suppressed wheat output.
The recovery in travel-related services has been upbeat since the onset of FY2023, 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. Moreover, within transportation, the railway and road sub-sectors are expected to post a healthy recovery in Q1 FY2023, as indicated by the healthy YoY growth in rail freight and GST e-way bills. In addition, other services, which include education, healthcare, recreation, and personal services, are likely to have seen a sharp base effect-led jump in this quarter.
The agency said the Government of India’s (GoI’s) capex, infrastructure/construction output and new project announcements showed encouraging trends in Q1 FY23, along with a robust order book position of construction and capital goods companies and the resilience in housing sales, as evinced by stamp duty collections. However, project completions, states’ capex and capital goods’ output were subdued, suggesting that the recovery in investment demand remained uneven.
