For the first three quarters of the current year, India’s real GDP growth figures stood at 6.4 per cent, 7.8 per cent and 7.6 per cent, respectively. RBI has also raised FY2023-24 growth forecast to 7.0 per cent from 6.5 per cent estimated earlier.
High frequency indicators including increase in GST collection, growth in private consumption, GDP print coming above market’s expectations, CPI inflation subsiding meaningfully, and a resilient earnings, suggest a sustained growth in the near-term, said an analysis report by Cushman & Wakefield. Other high frequency indicators such as monthly PMI surveys, retail sales, etc. too point towards sustained growth in consumption, it said.
For the first three quarters of the current year, India’s real GDP growth figures stood at 6.4 per cent, 7.8 per cent and 7.6 per cent, respectively. RBI has also raised FY2023-24 growth forecast to 7.0 per cent from 6.5 per cent estimated earlier. For most part of the current year, India’s CPI inflation remained within the comfort zone of RBI (below 6 per cent) and it is expected to record 5.4 per cent by year-end (Mar-24). However, the report stated that risks to inflation continue to persist and markets may have to wait for the rate cut cycle to begin.
The GST collection for the current fiscal year, recorded at Rs 13.3 trillion (April to November), reflected a 12 per cent increase compared to the same period last year. The year is likely to end at Rs 19.9 trillion worth GST collections. Looking ahead, at the FY2024-25 budget estimates, the Indian government has estimated 14-15 per cent growth in GST collections over FY 2023-24. GST collections have been on a consistent rise over the last three fiscal years and that provides a stable outlook despite global uncertainties.
Private consumption, constituting 57.3 per cent of the GDP, remains a pivotal contributor to this economic surge. The report stated that India’s domestic passenger vehicle sales is yet another indicator of a strong consumption demand story. Over the last two years, sales have consistently risen and for Oct-23 month, the sales recorded was highest ever. Similarly, domestic air passenger traffic has been clocking healthy volumes throughout this year.
Both, manufacturing as well as services PMI have shown great resilience over the last two years despite pressure coming from global macroeconomic uncertainty. Both readings have been comfortably above 50.
Furthermore, growth of the IT-BPM sector – a major consumer of India’s office space – has been muted this year after having witnessed healthy growth last fiscal year. Quarterly guidance by top 5 listed firms – TCS, Wipro, Infosys, HCL Tech and Tech Mahindra – suggests tepid growth in the near term. GCCs (Global Capability Centers), however, remain bullish on India’s potential basis existing talent pool and competitively priced and rapidly maturing real estate markets.
For most part of the current fiscal year FY2023-24, the revenue growth of top-5 listed IT-BPM players in India has remained muted. Infact, for the most recent Sept-23 quarter, some of these companies even witnessed a drop in revenues, largely stemming from a weak global IT spend expected for 2023 and 2024 as per estimates available from reputed IT consulting firms. Consequently, all the top-5 listed IT companies have unanimously lowered their revenue guidance for the current fiscal year, suggesting a flattish to modestly negative growth. However, IT industry attrition rates have lowered significantly and that enables companies to stabilize operations faster, including fast-tracking of return-to-office of employees.
Source:financialexpress.com