SBI upgrades FY24 growth estimates to 6.7 pc, raises outlook

After India's GDP beat estimates to grow at 7.2 per cent in FY22-23, SBI's research report Ecowrap upgraded FY 24 growth estimates to 6.7 per cent from 6.2 per cent. We are currently factoring in a pick up in growth momentum in FY24. We are upgrading our baseline forecast from 6.2 percent to 6.7 percent. We project real GDP growth for FY24 at 6.7 per cent with Q 1 at 7.8 per cent, Q 2 at 6.5 per cent, Q 3 at 6.3 per cent and Q 4 at 6.2 per cent, amid widely balanced risks, the report said.

The Indian economy grew at 7.2 per cent in FY 23 against the previous forecast of 7 per cent and the SBI forecast of 7.1 per cent. The improvement in the fourth quarter of the year is primarily due to the 6.1 percent growth in the fourth quarter of the year.

In FY23, manufacturing was the only industry to exhibit muted growth of 1.3 per cent, while in Q4 manufacturing jumped by 4.5 per cent. Agriculture grew 4 per cent, mining and quarrying by 4.6 per cent, construction by 10 per cent, financial, Real Estate Professional Services grew by 7.1 per cent and Trade, Hotels, Transport, Communications Services related to Broadcasting grew 14 per cent.

The construction sector has remained robust thanks to the government's sustained impetus on infrastructure spending, the report said. The government's capex push is causing investment activities to be at an all-time high. New investment announcements, led by private industries, reached an all-time high of Rs 37 lakh crore in FY23, compared to Rs 20 lakh crore in FY22.

The overall economic recovery is still robust, despite a slowdown in demand, the report said. The private investment activity looks robust and domestic monetary and credit conditions remain supportive of growth in FY24, the report said.

The SBI Ecowrap said that private consumption rose to 7.5 percent in FY23, while government consumption registered a growth of 0.1 percent in real terms.

When it comes to wages, rural wages increased by 6 per cent year-on-year on an average in fourth quarter of FY23. The agricultural workers' wages rose at an even higher rate. The rate of growth for all jobs and for agri workers has been modest, below 0.5 oer cent yoy growth. FMCG companies in the listed space reported 14 per cent growth in top line, while the bottom line grew 28 per cent in Q4 FY 23 as compared to previous year. Some of the companies, however, have reported a decline in rural volume due to sluggish demand, the report said.

The World Bank had predicted India's growth in FY 24 to be at 6.3 per cent, while the Reserve Bank of India in the last MPC predicted India's growth to be at 6.5 per cent. The International Monetary Fund IMF projected India's GDP growth for the year 2023 - 24 at 5.9 per cent.

1% in Q4; expands 7.2% in FY23:govt data