SBI and ICRA see economy growing in double-digits in June quarter

Rating agency ICRA has predicted that India’s gross domestic product (GDP) will grow 13 per cent year-on-year (YoY) in the first quarter of financial year 2022-23 (Q1FY23), while the State Bank of India has pegged it at 15.7 per cent YoY.

This marks a sharp uptrend from the 4.1 per cent growth recorded in Q4FY22, but the projections are lower than the Reserve Bank of India’s projection of 16.2 per cent GDP growth in Q1.

For the full year, SBI predicted a GDP growth rate of 7.5 per cent, which is 30 basis points higher than the RBI’s projection of 7.2 per cent.

Gross value added (GVA) in agriculture, forestry and fishing is projected to contract by 1 per cent in Q1, against 4.1 per cent growth in Q4FY22, on account of the adverse impact of the heat wave in several parts of the country, which suppressed wheat output, ICRA said.

ICRA expects 17-19 per cent growth in the services sector in Q1, against 5.5 per cent in the last quarter, thanks to a shift towards contact-intensive services from discretionary consumer goods. “The recent moderation in commodity prices,” ICRA chief economist Aditi Nayar added, “if sustained, should help ease inflationary as well as margin pressures and translate into improved demand for discretionary goods and higher value-added growth, respectively”.

The industrial sector is expected to grow 9-11 per cent in Q1 against the 1.3 per cent in Q4. Private final consumption expenditure in real terms is expected to see significant growth, showcasing strong recovery in consumer demand. The challenge of tepid export demand, and the impact of high commodity prices on volumes and margins for the industrial sector, is likely to result in relatively moderate industrial growth, Nayar said.

Meanwhile, the fast-moving consumer goods sector continued to witness tepid demand as rising retail inflation in Q1 exerted pressure on discretionary spending, noted SBI, adding that firms’ revenue growth in Q1 was mainly by value and not volumes.

The SBI report said with the dollar index moving up again to 108, the rupee has witnessed weakening trends. But this can be thwarted as there is growing demand for the Yuan to procure crude and other commodities and also Russia-Turkey bilateral agreement to use the rouble as the monetary unit. The SBI report backs the Indian economy because of strong macro-fundamentals and structural policy changes made to deal with the volatility of the foreign exchange market.


The recovery of private investment demand remained uneven due to subdued states’ capex and capital goods’ output, stated ICRA report.

Downside risks from the Russia-Ukraine conflict for the global economy seem to have moderated, it said. Inflation has emerged as a global policy challenge, as is evident from the fears of a contraction globally, noted SBI.

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