Indian economy to accelerate in double digits, says analysts of ICRA and Barclays

India is all set to report the GDP figures for the first quarter of the Financial Year 2022-23 (Q1 FY23) on August 31. Analysts at the ICRA ( Investment Information and Credit Rating Agency) expect the Indian economy to grow in double digits at 13 percent, owing to a low base and robust recovery in contact-intensive sectors like travel, hospitality, beauty, wellness, etc following the widening vaccination coverage.

Meanwhile, Barclays which is a multinational universal bank estimated that India’s economic growth accelerated to 16 percent on year in the April-June quarter. The firm expected that India’s economy would show a full recovery from COVID in the quarter under review with the services sector fully open, trade activity at peak, and domestic demand holding strong.

Barclays analysts Rahul Bajoria and Virinchi Kadiyala in a report. “The economy was fully opened, with all activity restrictions (which were imposed due to the COVID-19 pandemic) removed. While some supply headwinds were evident in the form of lingering intermediate-good shortages and higher input costs, we expect both the domestic goods and services sectors to show impressive recoveries in the first quarter,” they said.

Agricultural growth might take dip, mining GDP likely to grow:

While breaking down the sectors, Barclays expects the agricultural production and demand for rural goods to stay strong despite some weather-related issues and higher costs. “We expect agriculture growth to slip to around 3.0 percent in Q1 FY23, down modestly from 4.1 percent in Q4 FY22.”

In mining the analysts expect the overall growth to be robust due to elevated electricity demand and infrastructure spending, despite reports of coal shortages and depleted inventories. “The mining GDP should grow by around 12 percent on year in the April-June quarter, which would be the strongest rate since Q2 FY21” both the analysts of Barclays said.

Manufacturing, electricity, mobility sectors likely to show growth:

According to the reports by Barclays, the segment of manufacturing and electricity are likely to witness double digit growth, as strong exports, coupled with an unusually hot summer added to demand for electricity. The reports also added, “This expected jump in manufacturing comes despite relative underperformance in the auto sector, which we expect to continue to revive through H2 CY2022.”

While export trade volumes were high during the quarter, high commodity prices increased India’s import bill, which exerted a drag on overall economic activity. The fuel prices were moving sideways during the period but given the very low base, strong performance is expected to be seen in mobility indicators such as air and rail traffic to add to economic activity.

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