New Delhi. The Advance Estimates released by the NSO peg GDP growth in FY2024 at 7.3%, much higher than our estimate of 6.5%. Implicitly, the NSO expects the GDP growth to moderate to 7.0% in H2 FY2024 from 7.7% in H1 FY2024. Surprisingly, the estimated GVA growth of 6.9% for FY2024 implies that growth in this metric has been assumed at 6.2% in H2, significantly lower than the imputed GDP number for this period.
In our view, the growth assumed for H2 FY2024 is quite high, given the tepid outlook for agriculture amidst the weak kharif output and ongoing lag in rabi sowing, as well as the feared temporary slowdown in capex ahead of the General Elections. In fact, the GoI’s capex declined by 8.8% YoY during October-November 2023 after rising by 43.1% in H1 FY2024.
Consequently, we believe that the agri and construction GVA growth for H2 FY2024 is likely to print lower than that estimated by the NSO. Besides, we also believe that the growth estimated for the services sector for H2 FY2024 is on the higher side.
The NSO has pegged the nominal GDP growth at 8.9% in FY2024, sharply lower than the 16.1% seen in FY2023, with the deceleration largely on account of the turnaround in the WPI print to a deflation from an inflation in the previous year. Based on the nominal GDP for FY2024 estimated by the NSO, the GoI's absolute budgeted fiscal deficit of Rs. 17.9 trillion works out to 6.0% of GDP, a tad higher than the FY2024 BE of 5.9% of GDP."
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