Economic growth to slow down to 6.7-6.9% in Q3: Report

SBI report: The Indian economy is expected to grow at a rate of 6.7-6.9 per cent in the December quarter of FY24, compared to a growth rate of 7.6 per cent in the previous quarter, according to a report by SBI Research released on Wednesday. The projected lower growth is attributed to poor performance in the farm sector.

The report, which precedes the official GDP data release for the third quarter of the 2023-24 financial year, highlights that India maintained its position as the world's fastest-growing major economy. The GDP expanded by a faster-than-expected rate of 7.6 per cent in the September quarter, buoyed by government spending and manufacturing activities.

SBI Research's growth forecast of 6.7-6.9 per cent for the December quarter is slightly lower than the Reserve Bank's projection of 7 per cent growth. The report also anticipates a GDP growth rate of 6.8 per cent in the fourth quarter.

The primary reason for the subdued growth forecast is the weak performance of the farm sector, except for fisheries, which has been severely affected. The production of major Kharif crops in 2023-24 is estimated to be 4.6 per cent lower than the previous year. Additionally, concerns arise from a decline in the sown area under cereals during the rabi season.

Despite the agricultural challenges, corporate results from around 4,000 listed entities for Q3FY24 indicate robust growth, with profit after tax (PAT) increasing by over 30 per cent and topline growing by around 7 per cent compared to the same period in the previous year. Furthermore, improvement in margins is observed among listed entities, excluding banking, financial services, and insurance sectors, with margins reaching 14.95 per cent in Q3 compared to around 12 per cent in the previous year's corresponding period.

(With PTI inputs)