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Informist, Wednesday, Nov. 6, 2024

 

NEW DELHI – The Indian economy is likely to have grown at a six-quarter low of 6.5% in the September quarter, State Bank of India's research team said in a report on Wednesday. SBI's forecast is much lower than the Reserve Bank of India's, which projects GDP to have grown 7.0% in Jul-Sept.

 

"High-frequency indicators indicate that aggregate demand continued to grow albeit with a slower momentum than in the preceding quarters and painting a somewhat mixed picture," SBI's Group Chief Economic Adviser Soumya Kanti Ghosh said in the report. "For instance, domestic passenger vehicle sales which is an indicator of urban demand as well as other indicators of consumption and demand as diesel consumption, electricity demand and bitumen consumption have eased."

 

Of the 50 leading indicators tracked by SBI's research team, only 69% showed acceleration in Jul-Sep, compared to 80% a year ago and 78% in Apr-Jun. Ghosh, however, is of the view that this is a "temporary impasse" and the narrative might change from Oct-Dec.

 

Ghosh said the central government's capital expenditure, which has lagged because of the General Election, should gain traction in the second half of 2024-25 (Apr-Mar). Rural consumption and demand is also gaining buoyancy, as reflected by domestic tractor sales, which rose in October, Ghosh said. Domestic two-wheeler and three-wheeler sales are showing consistency in growth, while rural farm wage growth accelerated in August.

 

While Jul-Sept GDP growth is seen around 6.5%, data for which will be released on Nov. 29, the expected buoyancy in Oct-Dec and Jan-Mar growth numbers could push the full-year GDP growth closer to 7% in FY25, Ghosh noted. SBI's FY25 GDP growth estimate is lower than the RBI's projection of 7.2%, but in line with the 7% forecast of the International Monetary Fund and the World Bank.  End

 

Reported by Shubham Rana

Edited by Avishek Dutta

 

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