India's Q2 GDP Data To Be Out Today: 5 Key Things To Watch Out For

India’s Q2 GDP Data: The gross domestic product data for the latest July-September 2023 quarter is set to be released at 5:30 pm on Thursday, November 30. The quarter witnessed an erratic monsoon, weak external demand, and a muted rural demand for most FMCG companies. Therefore, for Q2 FY24, analysts expect a slower GDP growth between 6.5 per cent and 7.1 per cent year-on-year (y-o-y), compared with 7.8 per cent in the previous quarter (Q1 FY24).

India’s Q2 GDP Grows 7.6% Vs 6.2% A Year Ago; Official Data Beats Expectations

Rating agency Icra expects India’s GDP to grow 7 per cent in Q2FY24, State Bank of India (SBI) sees a 6.9-7.1 per cent growth, Barclays India expects the Indian economy to grow 6.8 per cent, and the RBI sees the country’s GDP growth at 6.5 per cent in the July-September 2023 quarter. Here’s what you need to watch out for in the latest GDP numbers:

Consumption

Private final consumption expenditure is the largest component accounting for 60 per cent of the GDP. Its movement has a huge weightage on the entire GDP number.

In the previous quarter ended June 2023, private final consumption expenditure (PFCE) and government final consumption expenditure (GFCE) grew 5.9 per cent and (-) 0.71 per cent, respectively, y-o-y.

Investment and Infrastructure

Gross fixed capital formation (GFCF) is an indicator of investment activity in the country. A growth in GFCF indicates a jump in investment in the country.

“India’s investment activity was quite robust in Q2 FY2024. The YoY growth performance of seven of the 11 investment-related indicators improved in Q2 FY2024 relative to Q1 FY2024,” Icra said in a report.

Agriculture Growth

Agriculture is the sector that remained resilient during the pandemic period. It provided positive growth when all other sectors posted negative growth during the lockdown.

However, as the year 2023 is an El Nino year causing shortfall in rains, the Q2 FY24 might see a sharp decline in growth in gross value added (GVA) to as low as 1-1.5 per cent.

Manufacturing Growth/ Industrial Sector

Manufacturing growth was hit majorly first during the coronavirus pandemic and then due to the Russia-Ukraine war that led to supply disruptions, which increased commodity prices and thus input costs for companies.

ICRA estimates the industrial GVA growth to have risen to 6.6 per cent in Q2 FY2024 from 5.5 per cent in Q1 FY2024, boosted by manufacturing, electricity, and mining.

Services Sector Growth

Urban demand has reportedly been strong as reflected by a step up in passenger vehicle sales, on-line food deliveries, airline traffic and hotel occupancies which has particularly translated into a stronger than anticipated momentum in the services sector, said Suman Chowdhury, chief economist and head (research) at Acuité Ratings & Research.

In the previous quarter ended June 2023, India’s GDP grew at four-quarter high of 7.8 per cent y-o-y during the April-June 2023 quarter (Q1 FY24) as compared with the 6.1 per cent growth registered in the preceding quarter ended March 2023.