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Unfavourable base effect as well as easing of farm sector output will bring India's real GDP growth to about 5 per cent in Q3FY21 on a year-on-year (YoY) basis, said Motilal Oswal Financial Services (MOFSL).

MOFSL's in-house Economic Activity Index (EAI) for India's GVA (EAI-GVA) posted a nine-month low growth of 2.2 per cent YoY in November 2021, compared to 4.1 per cent YoY growth in October 2021 and 5 per cent in November 2020.

"The lower EAI-GVA growth was broad-based. The farm sector grew at the slowest pace in three months, while industrial and services activity grew at the slowest pace in nine months in November 2021. Similarly, EAI-GDP grew just 2.4 per cent YoY in November 2021, against 4.6 per cent YoY growth in October 2021," it said.

According to MOFSL, total consumption growth weakened in November 2021 on account of faster decline in automobile sales, lower petrol sales and slower fiscal spending growth.

"Private consumption growth eased to five-month lows of 5.9 per cent YoY in Nov'21, compared with 6 per cent in Oct'21. Total investment growth at 3.9 per cent YoY was the weakest in nine months, and government capex contracted for the second consecutive month in Nov'21," it said.

"Both real exports and imports grew slowly in Nov'21 (vis-A-vis Oct'21); however, the contribution of net exports to EAI-GDP worsened," MOFSL added.

In terms of GVA perspective, MOFSL said the farm sector grew 0.7 per cent YoY slower versus the 1.3 per cent growth reported in the previous three months.

"Conversely, the non-farm sector expanded just 2.4 per cent vis-a-vis 4.3 per cent growth in Oct'21. The Services sector grew 2.1 per cent YoY in Nov'21, slower than 2.6 per cent growth posted in the industrial sector," it said.

Besides, MOFSL said that an analysis of the few available monthly indicators for December 2021 suggests there was no major improvement in economic activity last month.

"PMI manufacturing weakened and ‘vahan' registrations declined at a faster pace; however, merchandise imports and power generation fared better in Dec'21 (vis-a-vis Nov'21).

"Overall, our in-house estimates suggest growth in economic activity weakened further in Nov'21, as expected. With the favourable base effect fading out, current trends appear weaker than the general expectation," it said.