India's Economic Activity Grows Slowly In Oct; Expect Q3 FY23 Real GDP Growth At ~4.5% YoY: Motilal Oswal

Motilal Oswal Report

Preliminary estimates indicate India’s economic activity index for gross added grew at a seven-month low pace of 6.4% YoY in Oct-22 versus 9.3%/4.5% YoY in Sep-22/Oct-21, respectively.

The slowdown was due to moderate growth in both farm as well as non-farm sectors.

Similarly, EAI-gross domestic product too inched up by only 5.1% YoY in Oct-22 as against 8.6%/4.8% YoY in Sep-22/Oct-21, respectively. This was due to a deceleration in investments growth and 5.4% negative contribution by external trade during the month.

Consumption, on the other hand, grew at a five-month high pace of 10.4% YoY in Oct-22 from 5.7% YoY in Sep-22. A large part of this growth was led by fiscal spending but even after excluding government expenditure, private consumption grew at a four-month high of 5.2% YoY in Oct-22 versus 3.1% YoY a month ago.

Notably, government spending has aided economic activity tremendously in Oct-22. Excluding government spending, EAI-GDP would have actually contracted 0.4% and EAI-GVA would have grown by only 5.1% YoY in Oct-22.

A monthly analysis of selected indicators for Nov-22 suggests slightly better trends.

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