GDP QUARTERLY November 29, 2013 Sutapa Roy E-mail: s-roy@microsec.in - 1 -
Quarterly GDP (Q2 of FY2013-14) India s GDP grew at the rate of 4.8 percent in Q2 of FY2013-14 from a year earlier, after expanding by 4.4 percent YoY in Q1 of FY2013-14. India s Q2 (July-September) FY2013-14 GDP (Gross Domestic Product) growth accelerated to 4.8 percent YoY, helped by a sharp uptick in Agricultural production and a mild recovery in Industrial sector. The number was better than the 4.4 percent YoY growth registered in Q1 of FY2013-14, however, remained below the 5 percent mark for the fourth consecutive quarter. During the quarter, Agricultural growth picked up to 4.6 percent YoY on account of an above normal monsoon. Industry growth accelerated to 2.4 percent YoY against 0.2 percent in the previous quarter, due to an improvement in core sectors growth. However, growth in Services sector moderated sharply to 5.9 percent YoY against 6.6 percent YoY registered in Q1 of FY2013-14, attributed by lower consumption demand as well as government expenditure. However, on expenditure side, India s GDP grew by 5.6 percent in Q2 of FY2013-14 from a year earlier, after increasing by 2.4 percent in the previous quarter, led by robust Exports performance. In absolute terms, at constant (2004-2005) prices, GDP for Q2 of FY2013-14 increased to INR13.68 lakh crore vis-à-vis INR13.05 crore during the same quarter of FY2012-13. In current prices, GDP was calculated at INR25.05 lakh crore against INR22.28 crore in Q2 of FY2012-13, showing a growth of 12.4 percent. Exhibit 1: GDP Growth Trend Outlook: Without any sign of recovery in Service sector, it may be a hard task to achieve a growth rate of above 5 percent. However, India has received a plenty of rain from this year s monsoon, so Agricultural production along with a strong Exports is likely to support GDP growth. A bumper agricultural production is also expected to encourage rural consumption and thereby help in Industrial recovery particularly in FMCG sector. Overall, we continue to expect GDP growth of 4.8 percent YoY for FY2013-14. Agricultural sector grew by 4.6 percent YoY in Q2 of FY2013-14 vis-à-vis a growth of 2.7 percent YoY in Q1 of FY2013-14. Agricultural Sector Above-normal monsoon lifted Agricultural growth to 4.6 percent YoY in the quarter ended September 2013 vis-à-vis a growth of 2.7 percent YoY registered in Q1 of FY2013-14. According to the First Advance Estimates of Production of Foodgrains, Oilseeds and other Commercial Crops for 2013-14 released by the Department of Agriculture and Cooperation, - 2 -
production of coarse cereals, pulses and oilseeds are expected to grow by 4.9 percent YoY, 1.9 percent YoY and 14.9 percent YoY respectively, during the Kharif season of 2013-14. Exhibit 2: Growth trend in Agricultural Sector Manufacturing production grew by 1.0 percent YoY in Q2 of FY2013-14 vis-àvis a decline of 1.2 percent YoY registered in Q1 of FY2013-14. Industry Industry growth accelerated to 2.4 percent YoY in Q2 of FY2013-14 against 0.2 percent in the previous quarter, due to an improvement in core sectors growth. Production of Manufacturing sector increased by 1.0 percent YoY against a decline of 1.2 percent YoY registered in Q1 of FY2013-14. Other than that, production of Mining sectors registered degrowth of 0.4 percent YoY against -2.8 percent YoY registered in Q1 of FY2013-14. Electricity production grew by 7.7 percent YoY compared with a growth rate of 3.7 percent YoY in Q1 of FY2013-14. Growth in Construction sector came in at 4.3 percent YoY during Q2 against 2.8 percent YoY in Q1 of FY2013-14. The key indicators of Construction sector, namely, production of cement and consumption of finished steel registered growth rates of 5.9 percent YoY and 1.3 percent YoY, respectively in Q2 of FY2013-14 Exhibit 3: Industry Growth Trends - 3 -
Trade, Hotels, Transport and Communication grew by 4.0 percent YoY during Q2 of FY2013-14 compared with 3.9 percent YoY in Q1 of FY2013-14. Services Growth in Services sector moderated sharply to 5.9 percent YoY against 6.6 percent YoY registered in Q1 of FY2013-14, attributed by lower consumption demand as well as government expenditure. In Services sector, growth rate of Trade, Hotels, Transport and Communication came in at 4.0 percent YoY compared with 3.9 percent YoY in Q1 of FY2013-14. Among the sectors, key indicators of railways, namely, the net tone kilometers and passenger kilometers have shown growth rates of 3.7 percent YoY and -2.5 percent YoY, respectively in Q2 of FY2013-14. In the Transport sector, the sale of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation and passengers handled by the civil aviation registered growth rates of -22.1 percent YoY, 5.9 percent YoY, 0.4 percent YoY and 12.6 percent YoY, respectively in Q2 of FY2013-14. Financing, Insurance, Real Estate and Business Services has shown a steady growth in Q2. The sector grew by 10.0 percent YoY during the quarter against 8.9 percent YoY in the previous quarter. Among the sectors, the key indicators, namely, aggregate bank deposits, and bank credits have shown growth rates of 12.0 percent YoY and 15.4 percent YoY, respectively as on September 20, FY2013-14. Community, Social and Personal services grew by 4.2 percent YoY vis-à-vis a growth of 9.4 percent YoY in Q1 of FY2013-14. Exhibit 4: Services Growth Trends Exhibit 5: Percentage Trend in GDP Growth Particular FY13-14 FY13-14 FY12-13 FY12-13 FY12-13 Q2 Q1 Q4 Q3 Q2 GDP 4.8 4.4 4.8 4.7 5.2 Agriculture 4.6 2.7 1.4 1.8 1.7 Mining -0.4-2.8-3.1-0.7 1.7 Manufacturing 1.0-1.2 2.6 2.5 0.1 Electricity 7.7 3.7 2.8 4.5 3.2 Construction 4.3 2.8 4.4 2.9 3.1 Trade,Hotels,Transport and Communication 4.0 3.9 6.2 6.4 6.8 Financing,Ins,Real Est and Bus Services 10.0 8.9 9.1 7.8 8.3 Community, Social and Personal Services 4.2 9.4 4.0 5.6 8.4-4 -
GDP Growth by Expenditure On the expenditure side, India s GDP grew by 5.6 percent YoY in Q2 of FY2013-14, on account of a robust Exports performance. Growth rate was 2.4 percent YoY in Q1 of FY2013-14. Gross Fixed Capital Formation (GFCF) (Fixed Investment) registered a growth of 2.6 percent YoY in Q2 against de-growth of 1.2 percent YoY in the previous quarter. Private Final Consumption Expenditure (PFCE) grew by 2.2 percent YoY in Q2 of FY2013-14 against 1.6 percent YoY in Q1 of FY2013-14. Government Final Consumption Expenditure (GFCE) growth declined by 1.1 percent YoY in Q2 of FY2013-14 against a growth of 10.5 percent YoY registered in Q1, on account of a sharp cut back in Government spending. During the quarter Exports grew by a staggering 16.3 percent YoY, benefitting from improving global demand and a depreciated rupee. Exhibit 6: PFCE, GFCE & Investment Growth Trend Exhibit 7: Percentage Trend in GDP Growth by Expenditure (at market prices) Particular FY13-14 FY13-14 FY12-13 FY12-13 Q2 Q1 Q4 Q3 GDP at market prices 5.6 2.4 3.0 4.1 Private Final Consumption Expenditure (PFCE) 2.2 1.6 3.8 4.2 Government Final Consumption Expenditure (GFCE) -1.1 10.5 0.6 2.2 Gross Fixed Capital Formation (GFCF) 2.6-1.2 3.4 4.5 Exports 16.3-1.2-0.6-3.5-5 -
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