Q3FY24 GDP to drop to 6.7-6.9% due to poor agri performance

This slower growth is attributed to underperformance in the agricultural sector.

The report's publication precedes the official release of GDP data for the third quarter of the 2023-24 financial year, scheduled for the following day.

SBI Research underscored that the main reason for the downward revision in growth forecasts is the significant underperformance of the agricultural sector, with only fisheries showing resilience.

According to the initial estimates, the production of major kharif crops for the 2023-24 period is projected at 148.5 million tonnes, marking a 4.6 percent decrease compared to the previous year.

Although the sowing season for rabi crops suggests a marginal increase in overall acreage from the preceding year, there are apprehensions regarding the cultivated area for cereals, which experienced a decline of 6.5 percent compared to the previous year, as outlined in the report.

While there may be some moderation in the agricultural sector if the output of rabi crops fails to compensate for the shortfall in kharif production, it is expected that the value added in agriculture will decline, the report indicated.

Conversely, corporate results from approximately 4,000 listed entities for the third quarter of FY24 demonstrate robust growth, with profits after tax (PAT) increasing by over 30 percent and revenue growing by around 7 percent compared to the same period in FY23.

Moreover, there has been an improvement in margins among listed entities, excluding those in banking, financial services, and insurance (BFSI), with margins reaching 14.95 percent in Q3 compared to approximately 12 percent in the corresponding period of the previous year.

Corporate Gross Value Added (GVA), calculated as operating profit plus employee expenses, exhibited a growth of around 26 percent year-on-year in the third quarter.