BENGALURU, Nov 30 (Reuters) – India posted an financial progress of 6.3% in its July-September quarter, far slower than the 13.5% progress reported within the earlier three months as distortions attributable to COVID-19 lockdowns pale in Asia’s third-largest financial system.

Government capital spending elevated greater than 40% throughout the quarter because the federal authorities stepped up expenditure on infrastructure from roads to railways, based on official information on Wednesday. read more

The progress fee was above the 6.2% forecast by economists in a Reuters poll for the quarter, the second of India’s 2022/23 monetary 12 months.

COMMENTARY

MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI

“Second-quarter GVA (gross worth added) progress expectedly slowed at 5.6%, led by progress within the providers sector whereas manufacturing was a giant drag.

“Going forward, at the same time as restoration in home financial exercise is but to turn out to be broad-based, protracted international drags, shrinking company profitability, demand-curbing financial insurance policies and diminishing international progress prospects weigh on output.

“This will put pressure on domestic growth, which still lacks the next lever of secular growth. We see downside risks increasing for our 7% growth forecast for FY23.”

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

“The GDP numbers came in line with our expectations. However, the GVA numbers have been softer than expected, led by weaker manufacturing activity. Expectedly, the services segments have been playing catch-up although the sector still remains the only category lagging from its pre-pandemic levels. We retain our FY23 GDP estimate at 6.8% and remain watchful of the increasing global headwinds.”
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE

“Under the hood, the GVA components signal a two-speed momentum as agri and allied sectors fared better than expected, likely on non-farm output, while crop production was affected by inclement weather conditions, and contact-intensive sectors quickened as expected.

“Beyond the 2QFY information, which is backward-looking, sequential momentum is anticipated to ease within the second half of the 12 months as base results flip unfavourable, and pent-up demand in addition to festive bounce is basically behind us.”

KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU

“India’s actual GDP progress was barely decrease than our expectation. Both consumption and funding remained weak, the proof of which was clear taking a look at numerous excessive frequency indicators.

“Weak festival period led pent-up demand momentum, and hence, weak business confidence was also amply reflected in the IIP data. We retain our full-year growth expectation at 6.9% YoY.”

SUJAN HAJRA, CHIEF ECONOMIST, ANAND RATHI, MUMBAI

“The deceleration of GDP growth was expected due to both asymmetric base effect and sharp slowdown of exports in the latest quarter. We expect the growth slowdown to continue for the remainder of the current financial year.

“Services within the provide facet and investments within the demand facet would proceed to be the primary drivers of progress, whereas trade and consumption plus web exports would be the important drags.

“Tightening bias of monetary and fiscal consolidation would continue in India during the current year. Both policies are likely to turn neutral next year as inflation and growth rates cool off.”

SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI

“GDP growth at 6.3% in 2QFY23 was in line with our expectation of 6.2%. The internals indicate a substantially weak growth in the industrials sector, led by manufacturing while the services sector growth has been steady given the recovery in contact-based services.”

SAUGATA BHATTACHARYA, CHIEF ECONOMIST, AXIS BANK, MUMBAI

“Growth is likely to be lower in the third quarter, both due to post-festive demand seasonality as well as slowing export growth, given global conditions. Base effects of the corresponding quarters of FY22 will then lead to the actual growth prints, which we expect to average 4.5% Y/Y in H2 FY23.

“If these assumptions are appropriate, we should always see a 7%+ progress for FY23. However, FY23 progress is prone to be decrease, that international progress in 2023 is prone to be very anemic.

“A slowdown in the growth momentum in FY24 might actually be desirable, given global macro economic conditions. Manufacturing remains a concern, given the links with merchandise exports, which might need to be compensated with a shift to domestic demand. Services, as a whole, might be expected to hold up.”

ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURGAON

“The Q2 FY2023 GDP growth of 6.3% came in similar to our estimate of 6.5%, even as the GVA rise of 5.6% trailed our forecast (6.3%) by a wide margin, led by an unexpected contraction in manufacturing that seems to reflect the impact of high input prices on margins in certain sectors.

“We are retaining our estimate of the true GDP progress for FY2023 at 7.2%, though a deepening of the exterior slowdown poses a threat.”

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

“As anticipated, service exercise was the foremost driver of progress, whereas the manufacturing GDP contracted. On the demand facet, non-public consumption share to GDP fell — a sign in the direction of the fragility of the consumption restoration seen in Q1 because the pent-up demand impact pale and elevated inflation damage shopper spending.

“Going forward, both export growth and consumption could present downside risks to the GDP outlook. We expect H2 FY23 growth to be between 4% and 4.5% and full-year growth at 6.8%. For FY24, growth is expected to moderate further to 6% as global headwinds rise.

“This GDP print doesn’t change our view that the Reserve Bank of India (RBI) is prone to increase charges by 35bps, taking the coverage fee to six.25% at its December assembly.”
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI

“Even as domestic growth drivers on the services side continue to remain robust, weakening global demand amid tightening financial conditions remains the key risk for growth outlook for India in the near term. We see India’s FY23 GDP growth at 7.1% and FY24 GDP growth at 6%.”

DEVENDRA PANT, CHIEF ECONOMIST, INDIA RATINGS, MUMBAI

“GDP progress slowdown in 2QFY23 was on anticipated strains. Favourable base impact is slowly waning, larger inflation and weak demand – each inner and exterior – are having an influence in GDP progress.

“GDP progress within the second half is anticipated to decelerate additional. Unless inflation is beneath management and international demand recovers, it’s troublesome to maintain excessive progress momentum.”

Reporting by Chris Thomas, Navamya Ganesh Acharya, Rama Venkat, Meenakshi Maidas and Nishit Navin in Bengaluru; Editing by Sherry Jacob-Phillips

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