SBI’s research report Ecowrap, in its latest edition has projected India’s Gross Domestic Product (GDP) growth at 8.2 to 8.5 per cent for FY22. For Q4FY22, the SBI research report expects growth of 2.7 per cent.
“We are projecting GDP growth for FY22 at 8.5 per cent and Q4 FY22 at 2.7 per cent,” SBI’s Group Chief Economic Adviser Soumya Kanti Ghosh said in the report. “We however believe the GDP projection for Q4 FY22 is clouded by significant uncertainties,” Soumya Kanti Ghosh added.
“Nevertheless, we believe FY22 GDP numbers could move now closer to 8.5 per cent as Q4 GDP numbers as per SBI nowcasting Model,” the SBI’s Group Chief Economic Adviser said in the report.
The Center is scheduled to release the Q4 FY22 GDP numbers on May 31.
FY22 real GDP growth to be Rs 147.7 lakh crore: CSO
The second big puzzle could be the difference between the GVA and GDP figures in the fourth quarter, as there has been a strong growth in tax collections. The report said that this could significantly raise the GDP numbers, even if the GVA might be much lower.
The report said the Central Statistics Office (CSO) had projected Q4 GDP at Rs 41.04 lakh crore and FY22 real GDP growth of Rs 147.7 lakh crore, an improvement of 1.7 per cent over pre-pandemic levels.
SBI Nowcasting model with an unchanged quarterly figures pegs the growth rate of Q4 GDP at Rs 40 lakh crore, which is lower by Rs 1 lakh crore from the CSO preliminary projections.
We believe that an adjustment to the decline in Q1, Q2 and Q3 numbers could have a soothing effect on the Q4 GDP numbers. Every Rs 10,000 crore revision adds/subtracts 7 basis points from GDP growth, the report said.
Sectorial growth
Beyond the numbers, the initial trend of Q4FY22 results from Corporate in the listed space reported better growth numbers in parameters as compared to Q4 FY21 despite contraction in operating margins on account of higher input costs.
Sectors like Steel, FMCG, Chemicals, IT-Software, Auto Ancillary, Paper etc showed better growth.
However, sectors like Automobiles, Cement, Capital Goods – Electrical Appliances, Edible Oils, etc registered top line growth in Q4FY22 but registered negative growth in PAT as compared to Q4 FY22.
On crude oil prices, the SBI report said that it was sceptical that prices may not sustain higher levels for long.
RBI may hike rates in the June policy meeting
The report said the Reserve Bank of India (RBI) may hike rates in the June policy meeting and the cumulative rate hike in June and August is likely to be 75 basis points.
It added that the best thing that has emerged during the Covid-19 pandemic is the coordinated policy response by both the government and the RBI to contain the health crisis and now inflation.
“RBI has been largely successful in communicating its intentions to the market and appears to have mastered the art of managing expectations,” the report said.
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