Key Points
SBI's Nowcasting Model predicts sustained economic momentum
Manufacturing growth improves to 4.3% in Q3
Rural economy shows consistent stability and growth
India remains among fastest growing economies globally
The SBI report released on Wednesday considers the slowdown in the second quarter (Q2) as a “blip” and states that “presuming no major revisions are announced in the erstwhile Q1 and Q2 figures by NSO, we estimate the FY25 full year GDP at 6.3 per cent.”
The official GDP data for the third quarter is expected to be released on February 28.
The report states that the percentage of indicators showing acceleration has increased to 74 per cent in Q3FY25 vs 71 per cent in Q2FY25.
Continuing the momentum, a healthy rural economy is further reinforcing stability and sustains momentum in other sectors even as rural agriculture wage growth is consistent and domestic tractor sales and rabi crop sown have picked up momentum.
The report highlights that Capex is showing improvement in Q3 FY25 with majority of the states’ Capex as a percentage of BE (Budget estimate) being lower in FY25 on date but embracing a momentum in Q3 FY25, which augurs well for future developments.
It also points out that IIP manufacturing growth has improved from 3.3 per cent in Q2 FY25 to 4.3 per cent in Q3 FY25 and the SBI Index is also showing positive momentum in Q3.
India Inc. has reported positive EBIDTA growth/margins (44 bps) after two quarters, while Corporate GVA has improved substantially (QoQ), according to the report.
The report further states that despite the global slowdown, India has continued to remain one of the fastest growing economies.
It highlights that the recent update of the IMF’s global growth forecast estimates India’s growth at 6.5 per cent for both FY25 and FY26 on the back of robust domestic demand, infrastructure support and the Government’s strategic policy interventions
The SBI has built a ‘Nowcasting Model,’ to estimate GDP statistically, with 36 high frequency indicators associated with industry activity, service activity, and global economy.
The model uses the dynamic factor model to estimate the common or representative or latent factor of all the high frequency indicators from Q4 of FY13 to Q1 of FY23.
