India Ratings and Research has forecast the growth rate for the fourth quarter of 2023-24 at 6.2 per cent, while pegging it at around 6.9-7 per cent for the entire fiscal.

The government is expected to release the gross domestic product (GDP) numbers for the fourth quarter and the provisional estimates for 2023-24 on May 31.

In the first quarter, the Indian economy grew 8.2 per cent, 8.1 per cent in the second, and 8.4 per cent in the third. “We are expecting the fourth quarter growth to be 6.2 per cent and the overall GDP growth for FY24 to be around 6.9-7 per cent,” India Ratings and Research principal economist Sunil Kumar Sinha told PTI.

While the growth rate in the first two quarters benefited from a low base, 8.4 per cent growth rate in October-December 2023 was surprising, he added.

“When we analyze the data, then what is visible is the wedge between the GVA [gross value added] and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter. The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter,” he noted.

GVA is derived from the formula GVA = GDP+SP−TP, with SP being subsidies on products and TP, taxes on products.

GVA was 6.5 per cent in the third quarter, whereas the GDP growth rate stood at 8.4 per cent. This wedge is on account of higher taxes collected during the quarter, according to India Ratings and Research.

In the first quarter, the GVA and GDP growth was 8.2 per cent, while in the second quarter, the GVA was 7.7 per cent and GDP 8.1 per cent.

The Reserve Bank has estimated GDP growth for 2023-24 at 7 per cent.

For the current fiscal, Sinha said the GDP is expected to expand at 7.1 per cent.

“Even if we set aside the tax component, the momentum witnessed in the first and second quarters has continued in the subsequent quarters, and the likelihood is that momentum will continue in FY25,” he added.

The services sector, he said, will continue the momentum, led by construction and electricity, while mining and industrial output will be laggard. “The prediction of above normal monsoon [by the Indian Meteorological Department], if it turns out to be true, will see some revival in rural demand, which will support consumption demand, and make it broad-based, instead of skewed currently.”