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    GDP Growth Q4 FY24 - HDFC Bank

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    GDP Growth Q4 FY24 - HDFC Bank

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    GDP Growth Q4 FY24 - HDFC Bank

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    Classification - Public TREASURY RESEARCH 31 May 2024

    GDP Review: The GDP & GVA wedge continues


    • India’s Q4 GDP rose by 7.8% y-o-y -- significantly higher than consensus expectations (at 6.7%).
    Although, growth from the supply side – known as GVA – rose by 6.3% and was in line with our
    expectations. The wedge between GDP and GVA continued to remain high at 150bps in Q4 FY24, as net
    taxes (Taxes – subsidies) grew by 21.5%. This aligns with the high government cash balances (due to higher
    taxes and lower spending) in Q4 FY24 and the lower fiscal deficit print of 5.6% of GDP for FY24, also
    released today (Revised estimate was at 5.8% in Interim budget).

    • For the full year, GDP growth stood at 8.2% versus 7% in the previous year and the 7.6% estimate
    given in the second advance release (in February 2024). The full year GDP print was pushed up due to the
    higher Q4 FY24 prints. Looking at the internals, growth was driven by fixed investments (grew by 9%)
    while consumption growth remained low at 4%. Surprisingly, the residual component called
    “discrepancies” rose sharply by 123%, raising the possibility of future data revisions.

    • Nominal GDP growth moderated to 9.6% in FY24 (compared to 14.2% in FY23) – reducing its gap
    with real GDP growth. This was as the deflator (nominal GDP/real GDP) fell to 1.3% versus 6.7% in
    the previous year on the back of significantly lower WPI inflation (-0.7% in FY24). The lower deflator
    seems to have distorted the internal sectoral growth as well. For instance, the deflator for the manufacturing
    sector stood at -1.7%, in turn pushing up real manufacturing growth to 9.9% in FY24. To recall, real
    growth = nominal growth – deflator.

    • Relying on GVA for growth signals: For the full year, GVA growth rose to 7.2% in FY24 compared to
    6.7% in FY23. This shows that, even after keeping aside the various statistical distortions, growth
    momentum picked up pace in the last fiscal. The major drivers for growth included the manufacturing (at
    9.9%) and construction (9.9%) sectors while agriculture growth was a drag. Service sector growth stood
    at 7.6%,

    • FY25 Outlook: Looking ahead, we expect FY25 GVA growth of 6.8-7.0%. In Q1 FY25, we could continue
    to see the wedge between GDP and GVA to persist and remain high as government spending is expected
    to be low. In terms of drivers for FY25, economic activity is expected to be supported by a recovery in
    consumer demand, particularly in the rural sector as inflation stabilises and a normal monsoon supports
    rural incomes. On investments, the government is expected to continue doing the heavy lifting although
    we do expect a gradual pick up and broad basing in private capex as well. On the external front, goods
    exports are expected to rise as global growth holds ground.

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    Annual GVA: FY24


    %YoY FY21 FY22 FY23 FY24
    GVA -4.1 9.4 6.7 7.2
    Agriculture, Forestry and Fishing 4.0 4.6 4.7 1.4
    Industry -0.4 12.2 2.1 9.5
    Manufacturing 3.1 10.0 -2.2 9.9
    Electricity, Gas, Water Supply & Other Utility -4.2 10.3 9.4 7.5
    Construction -4.6 19.9 9.4 9.9
    Services -8.4 9.2 10.0 7.6
    Trade, hotels, transport & communication -19.9 15.2 12.0 6.4
    Finance, real estate & professional 1.9 5.7 9.1 8.4
    Public admin & Defence -7.6 7.5 8.9 7.8

    Annual GDP: FY24

    Quarterly GDP data


    %YoY Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24
    GDP 12.8 5.5 4.3 6.2 8.2 8.1 8.6 7.8
    Net Taxes 37.6 10.7 -2.6 7.7 8.0 12.8 32.0 21.5
    Private Consumption 18.5 8.2 1.8 1.5 5.5 2.6 4.0 4.0
    Govt Consumption 9.8 3.4 7.1 13.9 -0.1 14.0 -3.2 0.9
    GFCF 13.9 4.7 5.0 3.8 8.5 11.6 9.7 6.5
    Exports 19.1 11.7 10.9 12.4 -6.6 5.0 3.4 8.1
    Imports 26.1 16.1 4.1 -0.4 15.2 11.6 8.7 8.3
    Nominal GDP 25.5 15.0 9.4 9.2 8.5 9.6 10.3 9.9

    Source: MOSPI, CEIC, HDFC Bank

    Quarterly GVA data


    %YoY Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24
    GVA 11.3 5.0 4.8 6.0 8.3 7.7 6.8 6.3
    Agriculture, Forestry and Fishing 2.7 2.3 5.2 7.6 3.7 1.7 0.4 0.6
    Industry 6.8 -2.4 0.6 3.4 6.0 13.6 10.5 8.4
    Mining & Quarrying 6.6 -4.1 1.4 2.9 7.0 11.1 7.5 4.3
    Manufacturing 2.2 -7.2 -4.8 0.9 5.0 14.3 11.5 8.9
    Electricity, Gas, Water Supply & Other Utility 15.6 6.4 8.7 7.3 3.2 10.5 9.0 7.7
    Construction 14.7 6.9 9.5 7.4 8.6 13.6 9.6 8.7
    Services 16.7 9.8 7.2 7.2 10.7 6.0 7.1 6.7
    Trade, Hotels, Transport, Communication and Services
    Related to Broadcasting 22.1 13.2 9.2 7.0 9.7 4.5 6.9 5.1
    Financial, Real Estate and Professional Services 10.5 8.7 7.7 9.2 12.6 6.2 7.0 7.6
    Public Administration, Defence and Other Services 23.6 7.3 3.5 4.7 8.3 7.7 7.5 7.8

    Source: MOSPI, CEIC, HDFC Bank

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    Divergence between GDP and GVA: GDP higher than Discrepancies contributed 2.5 ppt to GDP in Q3 FY24
    GVA by 150 bps led by higher net taxes

    Source: CEIC, MOSPI, HDFC Bank Source: CEIC, MOSPI, HDFC Bank

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    Treasury Economic Research Team


    Abheek Barua Chief Economist [email protected] +91 (0) 124-4664305
    Sakshi Gupta Principal Economist [email protected] +91 (0) 124-4664338
    Mayank Jha Senior Economist [email protected] +91 (0) 124-4664354
    Swati Arora Economist [email protected] +91 (0) 124-4664354
    Avni Jain Economist [email protected] +91 (0) 124-4664354

    Disclaimer: This document has been prepared for your information only and does not constitute any offer/commitment to
    transact. Such an offer would be subject to contractual confirmations, satisfactory documentation and prevailing market
    conditions. Reasonable care has been taken to prepare this document. HDFC Bank and its employees do not accept any
    responsibility for action taken on the basis of this document.

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