iNDICA NEWS BUREAU–
The higher-than-expected momentum in the Indian economy may lead to a tight monetary policy from the Reserve Bank of India (RBI) for a longer period, and any reversal in the current stance is unlikely over the next six months, said Suman Chowdhury, Chief Economist and Head of Research at Acuite Ratings.
The second advance estimates of GDP for FY24 released by the National Statistics Office (NSO) on Thursday has sprung a major surprise in the markets. The GDP growth for Q3FY24 is pegged sharply higher at 8.4 per cent, as compared to the consensus estimate of 6.6 per cent, Chowdhury said.
“Further, the GDP estimates for the current year has been further revised to 7.6 per cent, which is again significantly higher than our forecasts of 6.8 per cent. One of the key reasons for the material shift in the GDP print is the revisions in the GDP data for some quarters of the previous fiscal,” Chowdhury said.
“What is noteworthy is the significant differential between GVA (6.5 per cent) and GDP (8.4 per cent) growth in the third quarter,” Chowdhury said.
The manufacturing sector has grown by 11.6 per cent YoY in Q3FY24, which may be partly due to higher operating margins driven by lower raw material costs.
Expectedly, the services sector has seen a significant uptick, but the agricultural sector has seen a modest contraction of 0.8 per cent during the quarter.
Importantly, private consumption growth has been sluggish at 3.6 per cent and in the context of high GDP growth, it remains an area of concern, Chowdhury added.
The Advance Estimates of National Income are indicator-based and are compiled using the benchmark-indicator method i.e. the estimates available for the previous year (2022-23) are extrapolated using the relevant indicators reflecting the performance of sectors. The First Advance Estimates (FAE) for 2023-24 were based on very limited data and by using Provisional Estimates of 2022-23 as benchmark estimates, according to the official statement.
For compilation of the Second Advance Estimates (SAE) 2023-24, the Provisional Estimates of 2022-23 used at the time of FAE have been replaced by First Revised Estimates (FRE) 2022-23 which have been compiled using industry-wise/institution-wise detailed information.
Thus, variations in the SAE from the FAE is attributed to revision of benchmark estimates and additional data available on various indicators like CPI, IIP, Revised Estimates of fiscal data, financial results of listed companies etc. used for compiling the estimates for 2023-24.
The quarterly estimates of previous years along with the first and second quarter estimates of 2023-24 released earlier have also undergone revision in accordance with the revision policy of National Accounts, the Ministry’s statement added.
