Indian economy to surpass 7 per cent growth in FY 23: SBI research report

According to a report released by the State Bank of India, the Indian economy is on track to exceed 7% growth in Fiscal Year 2023, with manufacturing serving as the primary driver.

According to the State Bank of India’s research report, Ecowrap, released on Friday, India’s growth in the fourth quarter of FY23 is likely to be 5.5 percent, bringing the country’s growth for FY23 to 7.1 percent. This is consistent with the National Statistical Office’s (NSO) January advance estimates, which predicted 7% growth for the fiscal year ending March 31, 2023.

According to Ecowrap, the diverse patterns of growth emerging around the world are posing unprecedented challenges to policymakers, regulators, and economists in assessing the real rates of projected growth, not only for the current year (2023), but also for 2024 and 2025, as the inflation trajectory management for central banks has been elongated following the unexpected turn of events last year.

In the midst of this global uproar, the SBI Research report stated that India is expected to pursue a different path of zeroing in on drivers of growth, looking for a renewed surge in resilient manufacturing while supporting the services sector to embrace enhanced efficiency.

Domestic consumption and investment are expected to benefit from improved prospects for agricultural and related activities, increased business and consumer confidence, and strong credit growth, while supply responses and cost conditions are expected to improve as inflationary pressures ease, according to the report.

The emphasis on capital expenditure in the Union Budget 2023-24 is expected to attract private investment, strengthen job creation and demand, and boost our growth potential, according to the report.

The RBI estimates Q4FY23 Real GDP growth at 5.1%, while the National Statistical Office (NSO) estimates FY23 growth at 7%. The RBI forecasts GDP growth of 6.5 percent in 2023-24, with 7.6 percent in the first quarter (Q1).

SBI’s ANN (Artificial Neural Network) model, based on 30 high-frequency indicators from key sectors, and tuned/trained to project the GDP numbers forecasts the quarterly GDP growth for the fourth quarter of fiscal 2022-23 (Q4FY23) at 5.5 per cent, the SBI Research Ecowrap said. It added at this rate, India’s GDP growth for FY23 is likely at 7.1 per cent.

World Economic Outlook (WEO) report from International Monetary Fund (IMF) in April 2023 revised the baseline growth forecast from 3.4 per cent in 2022 to 2.8 per cent in 2023, before settling at 3 per cent in 2024. The report said advanced economies (AEs) are expected to see an especially pronounced growth slowdown, from 2.7 per cent in 2022 to 1.3 per cent in 2023.

Global headline inflation in the baseline case is set to fall from 8.7 per cent in 2022 to 7 per cent in 2023 on the back of lower commodity prices though underlying (core) inflation is likely to decline more slowly, the report said.