India GDP - Not as rosy as the headline suggests

India's Q3 Real GDP grew at 8.40% (exp 6.60%) and Nominal GDP grew 10.10%.

What stood out in the report was the wide divergence of 190 bps between the Q3 Real GVA Growth at 6.50% and Q3 Real GDP Growth at 8.40% on account of higher net taxes on products.

Real GVA + Net taxes on products (Taxes - Subsidies) = Real GDP. Net Indirect taxes for Q3 grew 32% yoy.

Over the last 3 quarters growth has averaged, 3.75% in PFCE , 3.51% in GFCE and 10.24% in GFCF. Growth in PFCE moderated significantly over the 7.83% growth averaged over full year in 2022-23. Q3 GFCE declined 3.2% yoy and -11% over the quarter. This is also seen in higher Government Cash Balance.

For FY2023-24, Real GDP growth is est at 7.60% following a lower revised 7% (from 7.20%) expansion in the prior year. The First Advance Estimates (FAE) had pegged India GDP growth at 7.30% and nominal GDP est of 296.58 trn. The second advance estimates (SAE) peg GDP for FY2023-24 at INR 294 trn.

*Details*	2020-21	2021-22	2022-23	2023-24
*Details*	3rd RE	2nd RE	1st RE	SAE
*GVA at basic prices (Constant Prices)*	*1,26,87,345*	*1,38,76,840*	*1,48,04,901*	*1,58,27,708*
		*9.38%*	*6.69%*	*6.91%*
*Net taxes on Products*	*10,07,525*	*11,45,006*	*12,66,528*	*14,62,573*
		*14%*	*11%*	*15%*
*GDP*	*1,36,94,869*	*1,50,21,846*	*1,60,71,429*	*1,72,90,281*
		*9.69%*	*6.99%*	*7.58%*

Acc. to the Interim Budget, Fiscal Deficit is pegged at 17.34 trn which translates into 5.90% of GDP. The GoI accounts at the end of Jan 2024 show current fiscal deficit at 11.03 trn ( 63.6% of budgeted numbers).

Real GDP growth has averaged 8.20% over the last 3 quarters. 7.60% annual GDP growth translates into 5.95% Q4 GDP growth.

GVA at constant prices is estimated to grow at 6.91% following a 6.69% growth in the previous year and GDP is estimated to grow at 7.60% following 7% growth previously. Growth in the Agriculture sector will be crucial for the continued momentum going ahead.

Sector	Estimates	Contribution	Growth
1. Agriculture,forestry & fishing	22,87,329	14%	0.7%
2. Mining & quarrying	3,40,821	2%	8.1%
3. Manufacturing	27,17,235	17%	8.5%
4. Electricity, gas, water supply & other utility services	3,74,125	2%	7.5%
5. Construction	14,45,603	9%	10.7%
6. Trade, hotels, transport, c&s	29,57,058	19%	6.5%
7. Financial , real estate & prof servs	36,84,959	23%	8.2%
8. Public Administration, defence etc	20,20,579	13%	7.7%
*9. GVA at basic prices (Constant Prices)*	*1,58,27,708*		6.9%

Expenditure	Estimates	Contribution	Growth
GFCE	16,62,078	10%	3.0%
PFCE	96,05,526	56%	3.0%
GFCF	58,93,155	34%	10.2%
Exports	39,06,346	23%	1.5%
Imports	43,46,728	-25%	10.9%
CIS+Valuables+Discrepancies	5,69,905	3%
GDP at constant prices	1,72,90,281

Gross Fixed Capital formation lead by Government's continued focus on Capital Expenditure is driving the growth momentum. Expectations of a normal monsoon in 2024 will continue to push the growth momentum forward.

Comments

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