India Q1 GDP data to be out today; key things to watch out today

Q1 GDP Data: The much-anticipated GDP data for India's April-June 2024 quarter will be unveiled. This quarter is expected to show a slowdown in growth as projections vary between 6 per cent and 7.1 per cent, a dip from the 7.8 per cent growth recorded in the previous quarter, Q4 FY24. As expected, this slowdown is especially attributed to the contraction in government capital expenditure due to elections and the fall in urban consumer confidence.

Following are the five key things to watch out for when the GDP numbers are announced:

Growth in the Services Sector
Services, especially impacted by extreme summer heat during the quarter, are expected to be a mixed bag of performance. The heat wave was expected to increase electricity demand, while it depressed footfalls in most other areas of service and, as such, was likely to have hit overall growth in the sector. Put together, these will provide an indication of the health of the Indian economy in a fighting quarter when a series of GDP data comes out.

Consumption Patterns
One of the most important constituents of Since the private final consumption expenditure forms nearly 60 percent of India's gross domestic product, it becomes the most important constituent. In the last quarter, the PFCE recorded a growth of 3.98 percent over the corresponding period last year to Rs 24.97 lakh crore. Even a slight variation in this number could drive the overall GDP substantially in one direction or the other.

Investment and Infra
The other critical component is GFCF, which indicates investment activity. Though government capital expenditure remained contracted, gross FDI inflows have risen from $17.8 billion in Q1 FY24 to $22.5 billion and hence can boost the investment rate.

Growth of Agriculture
It was during the pandemic that the agriculture sector acted as a factor of stability. The challenges this quarter are on account of the decline in rabi and summer crop outputs and below-normal rainfall in June 2024, ICRA estimates agriculture GVA to grow by a mere 1.0 per cent in Q1 FY25.

Manufacturing and Industrial Sector
Manufacturing, hit by the disruptions of the pandemic and the Russia-Ukraine War, will see slower growth. The manufacturing sector is likely to be a drag on the growth in the April-June quarter. ICRA estimated growth in industrial GVA stood at 6.4 in Q1 FY25 against 8.4 per cent in Q4 FY24; manufacturing was at 7.0 per cent.