The Indian economy is expected to have grown at 8.3% during the first quarter of the current Financial Year 2024 (Q1 of FY24), i.e. between April-June, as per the latest report by SBI’s Economic Research Department (SBI Ecowrap).
SBI’s Chief Economic Advisor, Soumya Kanti Ghosh has authored this report. In a report on the 22nd of August, Ghosh said, “At SBI, we have developed an Artificial Neural Network (ANN) model with 30 high-frequency indicators. On the basis of the ANN model, we forecast that the quarterly GDP growth for the Q1FY24 (April-June 2023) would be at 8.3 percent.”
Various forecasts regarding the growth story of the Indian Economy
The latest SBI report has predicted a higher GDP growth rate as compared to other predictions made by national and International Economic agencies. For example, the International Monetary Fund (IMF) pegged India’s GDP growth at 6.1% in 2023. Whereas the RBI in its latest forecast, predicted that the nation’s GDP may have risen by 8% in Q1 FY24 and for the full year, it predicted a growth rate of 6.5%.
However, in the SBI report, Ghosh asserted that the GDP growth for FY24 will exceed the 6.5 percent forecast given by the Reserve Bank of India (RBI). He predicted that the growth in FY2023-24 as a whole would stand at 6.7 percent.
Double-digit growth in Capital expenditure
SBI’s Chief Economic Advisor, Ghosh added that the first quarter of 2023-24 saw a huge increase in capital expenditure both by the centre and the states.
In Q1 (April-June period), the Centre’s capex stood at Rs 2.78 lakh crore. This is a 63 percent year-on-year increase in June. Similarly, states like Andhra Pradesh, Telangana, and Madhya Pradesh have registered capex growth of up to 41 percent.
The SBI report highlighted that in Q1 of FY24, EBITDA, and PAT (profit after tax) grew by more than 30 percent, as compared to the Q1 of FY23. According to the report, the sectors that performed well were banks, auto, IT, Pharma, FMCG, refineries, etc.
The report asserted, “In Q1 FY24, manufacturing is sustained as reflected in IIP, automobile sales, and PMI data. Further, agriculture sales have been strong along with a high power supply. On the service side, passenger traffic picked up in Q4 FY23 has sustained, Air cargo traffic increased.”
Further, the SBI Ecowrap report noted that the banking sector has shown strong performance and credit growth has continued to grow in double digits. It has become broad-based across sectors.
According to Ghosh, the corporate margin is reflecting clear signs of improvement since Q4 FY23.
He said, “Further, it is pertinent to mention that corporate margin, which was under pressure for the last few quarters, has shown signs of improvement since Q4FY23 (January-March 2023). EBIDTA margin, on an aggregate basis of more than 3,000 companies, improved by 274 basis points to 15.81 percent in Q1FY24 as compared to 13.07 percent in Q4FY23 and 12.60 percent in Q1FY23 (April-June 2022), contributed by low input prices.”
This latest SBI report has come days ahead of official data which will be reported by the government on the 31st of August at around 5:30 PM.
