Winning Bizness Desk

Mumbai. State Bank of India (SBI) Chief Economist Soumya Kanti Ghosh has slashed the GDP growth forecast for FY23. For the full year it has been reduced from 7.5% to 6.8%. Statistical adjustments have been attributed to the lower GDP forecast. However, the growth momentum is expected to pick up in the second half of the financial year. Moody's Investors Service has also slashed India's GDP estimate for FY23. It has been reduced from 8.8% to 7.7% for FY23 and 5.2% for FY24. Moody's attributed this to rising interest rates and slowing global growth.

Estimates reduced after June quarter GDP figures

SBI and Moody's have lowered their growth estimates after the National Statistical Office (NSO) released GDP data for the April-June quarter of 2022-23 on Wednesday. According to NSO data, GDP growth in the June quarter stood at 13.5%. It was 20.1% in the same quarter last year. The GDP growth rate in the last quarter was 4.1%. That is, the growth rate of the country was better than the previous ie January-March quarter.

GDP far below market expectations

Ghosh said that GDP may have been in double digits, but still it is less than the expectations of the market. The biggest reason for this was the manufacturing sector growth, which saw a marginal growth of 4.8% in the first quarter. It was 49% in Q1FY22. The growth rate in construction was 16.8% as against 71.3% in Q1FY22. In addition, mining growth declined from 18% to 6.5%.

GDP was estimated to be 15.7%

For Q1FY23, the Economist had projected the GDP growth rate to be 15.7%. In addition, GVA growth was also lower than forecast. GVA growth (YoY) declined to 12.7% from 18.1% in the June quarter. In the remaining quarters, Ghosh expects GDP growth to be 6.9% in Q2FY23, 4.1% in Q3 and only 4% in Q4. Overall, Ghosh expects India's full-year economic growth to be 6.8% for FY23.

RBI's forecast of 7.2% growth

RBI had said in its monetary policy meeting earlier this month that the GDP growth rate is likely to be around 16.2% in the first quarter of the current financial year. RBI has retained the real GDP growth forecast for FY23 at 7.2%.