Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
GDP growth slips to a 15-quarter low 4.5% in Q3FY13 on account of moderating growth of services
ICRA RESEARCH SERVICES
March
2013
OVERVIEW
OVERVIEW
Indias gross domestic product (GDP) at factor cost (constant prices) expanded by a sluggish 4.5% in year-on-year (y-o-y) terms in Q3FY13,
inferior to market and our expectations (~4.9%) reflecting a slower-than-anticipated growth of the services sector (6.1% vs. our expectations
of 6.8%). The pace of growth of economic activity has weakened further in Q3FY13 after remaining between 5.1-5.5% in the previous three
quarters, led primarily by a deteriorating performance of the services sector.
Contacts:
Aditi Nayar
+91 124 4545 385
aditin@icraindia.com
The moderation in GDP growth to 4.5% in Q3FY13 from 6.0% in Q3FY12 was led by the agriculture & allied and services sectors, even as the
industrial sector displayed a small uptick. Service sector growth eased to 6.1% in Q3FY13 from 8.3% in Q3FY12, primarily reflecting a
considerable decline in the pace of growth of financing, insurance, real estate & business services (7.9% in Q3FY13, 11.4% in Q3FY12) and
trade, hotels, transport and communication (5.1% in Q3FY13, 6.9% in Q3FY12). In addition, the pace of growth of community, social &
personal services eased to 5.4% in Q3FY13 from 6.8% in Q3FY12. Moreover, a decline in the growth of agriculture & allied activities to 1.1% in
Q3FY13 from 4.1% in Q3FY12, reflecting the shortfall in kharif production in 2012, acted as a drag on overall GDP growth.
Industrial growth improved slightly, albeit to a sluggish 3.3% in Q3FY13 from 2.6% in Q3FY12, reflecting the performance of manufacturing
(2.5% in Q3FY13; 0.7% in Q3FY12) and mining & quarrying (-1.4% in Q3FY13; -2.6% in Q3FY12). However, this was partly offset by a
weakening growth of electricity, gas and water supply (4.5% in Q3FY13; 7.7% in Q3FY12) and construction (5.8% in Q3FY13; 6.9% in Q3FY12).
Table 1: Growth of GDP & Components (in %, constant 2004-05 prices, y-o-y)
Q3FY12
Q4FY12
Q1FY13
4.1%
2.0%
2.9%
Agriculture & Allied
2.6%
2.1%
3.6%
Industry
8.3%
7.3%
7.0%
Services
6.0%
5.1%
5.5%
GDP at factor cost
Q3FY12
Q4FY12
Q1FY13
9.2%
9.7%
2.0%
Private Final Consumption Expenditure
8.1%
7.6%
8.3%
Government Final Consumption Exp.
10.2%
13.4%
7.2%
Exports
24.0%
24.3%
3.9%
less Imports
-1.7%
2.6%
-4.6%
Gross Fixed Capital Formation
5.8%
5.2%
3.8%
GDP at market prices
Source: Central Statistics Office (CSO); ICRA Estimates
Q2FY13
1.2%
2.7%
7.2%
5.3%
Q2FY13
2.0%
8.0%
5.2%
13.8%
-1.0%
2.7%
Q3FY13
1.1%
3.3%
6.1%
4.5%
Q3FY13
4.6%
1.9%
-2.1%
-0.3%
6.0%
4.1%
2011-12
3.6%
3.5%
8.2%
6.2%
2011-12
8.0%
8.6%
15.3%
21.5%
4.4%
6.3%
9MFY13
1.7%
3.2%
6.7%
5.0%
9MFY13
2.9%
5.7%
3.3%
5.6%
0.1%
3.6%
Growth of GDP at market prices (at constant 2004-05 prices) slowed from 5.8% in Q3FY12 to 4.1% in Q3FY13. This was lower than the 4.5%
growth of GDP at factor cost in the same quarter, led by a 0.7% de-growth in indirect taxes less subsidies. Growth of Government final
ICRA LIMITED
P a g e |1
consumption expenditure (GFCE) slowed sharply to 1.9% in Q3FY13 from 8.1% in Q3FY12, in line with the fiscal tightening being undertaken by Government of India
(GoI). While the unfavourable monsoon in 2012 dampened consumer demand and contributed to an inferior growth of private final consumption expenditure (PFCE) in
Q3FY13 (4.6%) relative to the healthy 9.2% growth in Q3FY12, this represents an uptick relative to the 2% growth in H1FY13, suggesting a slight improvement in
consumer sentiments. In contrast, the pace of growth of gross fixed capital formation (GFCF) improved to from 6.0% in Q3FY12 from a revised de-growth of 1.7% in
Q3FY13, partly reflecting the base effect. Notably, growth of GFCF has been revised sharply to -4.6% for Q1FY13 (from +0.7%) and -1.0% for Q2FY13 (from +4.1%) while
that of PFCE has been revised downwards to 2.0% for Q1FY13 (from 4.0%) and 2.0% for Q2FY13 (from 3.7%).
Despite the 41% increase in nominal gold imports in US$ terms in Q3FY13 (in y-o-y terms), valuables expanded by a low 2% in Q3FY13 relative to Q3FY12 at current
prices. Data released by the CSO indicates that exports rose by 6% whereas imports expanded by 8% in Q3FY13 (at current prices). However, the drag imposed by
negative net exports moderated in Q3FY13 relative to the previous quarter.
Chart 1: Y-o-Y Growth in GDP (constant 2004-05 prices)
14%
Chart 2: Y-o-Y Growth in Agriculture, Industry and Services (constant 2004-05 prices)
20%
12%
15%
10%
10%
8%
6%
5%
4%
0%
2%
0%
-5%
Industry
Services
OUTLOOK:
Favourable rainfall in the ongoing quarter is expected to provide a limited boost to agricultural growth and hydroelectricity generation in Q4FY13 as compared to the
previous quarter. Moreover, agriculture typically forms a lower proportion of GDP in Q4 as compared to Q3 (as the kharif harvest is recorded in Q3); accordingly, we
expect a lower drag from agricultural growth in Q4FY13. As compared to the 1.2% manufacturing growth in 9MFY13, a favourable base effect is expected to boost
industrial growth in Q4FY13. Overall, GDP growth is expected to improve in Q4FY13 relative to the estimated 15-quarter low 4.5% in Q3FY13. Notwithstanding this
anticipated uptick, economic growth is likely to be sluggish at 5.0-5.2% in FY13. With the Union Budget for 2013-14 indicating compliance with the fiscal targets for 201213 and 2013-14, we expect the RBI to cut the Repo rate by 25 basis points in the mid-quarter policy review in March 2013 to bolster business sentiments and economic
growth.
ICRA LIMITED
P a g e |2
5.1%
5.5%
5.3%
5%
4.5%
4%
3%
Service sector growth moderates further: The services sector expanded by 6.1% in
Q3FY13, slower than the 8.3% growth in Q3FY12 and the 7.2% rise in Q2FY13.
2%
1%
Growth of financing, insurance, real estate & business services (FIRB) eased to 7.9%
in Q3FY13 from 11.4% in Q3FY12 and 9.4% in Q2FY13. Nevertheless, this remained
the fastest growing sub-sector of the services sector in Q3FY13. The growth
moderation reflects the easing pace of growth of non-food bank credit (to 14.9% at
end-Q3FY13 from 15.4% at end-Q2FY13) and bank deposits (to 11.1% from 13.8%,
respectively) in y-o-y terms. However, inflows from foreign institutional investors
(FIIs) underwent a healthy expansion in Q3FY13 (US$ 10.36 billion) relative to both
Q2FY13 (US$ 6.67 billion) and Q3FY12 (US$4.24 billion). The contribution of FIRB to
GDP growth declined to 1.4% in Q3FY13 from 2.0% in Q1FY13 and 1.8% in Q2FY13.
The pace of growth of trade, hotels, transport and communication (THTC) declined
to 5.1% in Q3FY13 from 6.9% in Q3FY12 and 5.5% in Q2FY13. The pace of growth of
commercial vehicles production, railway freight and cargo handled through major
ports has deteriorated in sequential quarters in Q3FY13. The contribution of THTC
to GDP growth declined to 1.3% in Q3FY13 from 1.5% in Q2FY13.
The pace of growth of community, social & personal services (CSPS), which includes
public administration & defence and other services, declined to 5.4% in Q3FY13
from 6.8% in Q3FY12, partly reflecting the 1% decline in GoIs revenue expenditure
in Q3FY13. The contribution of CSPS to GDP growth declined to 0.7% in Q3FY13
from 1.0% in Q2FY13.
The contribution of services to GDP growth declined to 76% in Q3FY13 from 83% in
Q2FY13, with the sector accounting for 3.4% of the 4.5% growth in Q3FY13.
0%
Q3FY12
Services
Q4FY12
Industry
Q1FY13
Q2FY13
Q3FY13
7.3%
7.0%
7.2%
6.1%
6%
4%
2%
0%
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Trade, Hotels, Transport & Communication
Financing,Insurance,Real Estate & Business Services
Community,Social & PersonalServices
Services
Q3FY13
ICRA LIMITED
P a g e |3
3.6%
3.3%
4%
3%
2.7%
2.6%
2.1%
3%
2%
2%
1%
1%
0%
-1%
Q3FY12
Q4FY12
Construction
Q1FY13
Manufacturing
Q2FY13
Q3FY13
Industry
-10.0%
-15.0%
The performance of the mining & quarrying sector worsened with a de-growth of
1.4% in Q3FY13 (-2.6% in Q3FY12) from a growth of 1.9% in Q2FY13 (-5.3% in
Q2FY12), partly reflecting the base effect. Moreover, the weakness in the mining
sector reflects the deterioration in the growth of coal output (to 1.5% in Q3FY13
from 10.6% in Q2FY13); worsening de-growth of natural gas output (to 15.0% in
Q3FY13 from 14.0% in Q2FY13) on account of issues related to the production of gas
from the Krishna-Godavari Basin; and suspension of iron ore mining in Goa and in
some regions of Odisha.
ICRA LIMITED
-20.0%
Coal
Crude Oil
Natural Gas
P a g e |4
Post-Monsoon
Monsoon
70
60
Rainfall in mm
50
40
30
20
10
0
Normal
Actual
ICRA LIMITED
6%
4%
2%
0%
Q2FY12
Q3FY12
Q4FY12
PFCE
Q1FY13
Q2FY13
GFCE
P a g e |5
Q3FY13
Improved growth of gross fixed capital formation reflects base effect: Gross fixed
capital formation (GFCF) expanded by 6.0% in Q3FY13, relative to the contraction
recorded in Q1FY13 (4.6%) and Q2FY13 (1.0%). However, this improvement reflects
the base effect, with a 1.7% de-growth in Q3FY12, with no visible signs of a pickup
in investment activity. Notwithstanding the improvement in growth based on CSOs
data for Q3FY13, growth of GFCF remains marginal at 0.1% in April-December 2012.
With existing projects getting implemented; several projects stalled on account of
regulatory issues; and a lag in announcement of new projects subsequent to the
reforms announced by GoI, the investment pipeline has dwindled, which is a cause
of concern.
2%
0%
-2%
GFCF as a proportion of GDP (at current prices) stood at 28.7% in Q3FY13, similar to
the level in Q3FY12 (28.8%), but remained weaker than the level in Q2FY13 (30.6%).
While previously released data had indicated a 1.2% and 0.1% decline in inventories
in Q1FY13 and Q2FY13, respectively data released now by CSO indicates a 49-51%
growth in the first three quarters of FY13 following a sharp revision in the quarterly
data for FY12.
-4%
-6%
Q2FY12
Q3FY12
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Chart 10: Y-o-Y Growth of Exports and Imports (constant 2004-05 prices)
30%
25%
20%
15%
10%
5%
0%
-5%
ICRA LIMITED
Q2FY12
Q3FY12
Q4FY12
Exports
Q1FY13
Q2FY13
Imports
P a g e |6
Q3FY13
ANNEXURE A:
Table 3: GDP & its components (y-o-y growth, constant 2004-05 prices)
Q3FY12
Q4FY12
6.0%
5.1%
GDP at factor cost
4.1%
2.0%
Agriculture & Allied
2.6%
2.1%
Industry
-2.6%
5.2%
Mining & Quarrying
0.7%
0.1%
Manufacturing
7.7%
3.5%
Electricity, Gas & Water Supply
6.9%
5.1%
Construction
8.3%
7.3%
Services
6.9%
5.1%
THTC
11.4%
11.3%
FIRB
6.8%
6.8%
CSPS
Source: CSO; ICRA Analysis
Q1FY13
5.5%
2.9%
3.6%
0.1%
0.2%
6.3%
10.9%
7.0%
4.0%
10.8%
7.9%
Q2FY13
5.3%
1.2%
2.7%
1.9%
0.8%
3.4%
6.7%
7.2%
5.5%
9.4%
7.5%
Q3FY13
4.5%
1.1%
3.3%
-1.4%
2.5%
4.5%
5.8%
6.1%
5.1%
7.9%
5.4%
2011-12
6.2%
3.6%
3.5%
-0.6%
2.7%
6.5%
5.6%
8.2%
7.0%
11.7%
6.0%
9M 2012-13
5.0%
1.7%
3.2%
0.1%
1.2%
4.7%
7.7%
6.7%
4.9%
9.4%
6.9%
Table 4: GDP & its components (y-o-y growth, constant 2004-05 prices)
Q3FY12
Q4FY12
5.8%
5.2%
GDP at market prices
9.2%
9.7%
PFCE
8.1%
7.6%
GFCE
10.2%
13.4%
Exports
24.0%
24.3%
less Imports
-3.7%
3.6%
Gross Domestic Capital Formation
-1.7%
2.6%
GFCF
-32.0%
-32.4%
Change in Stocks
8.4%
15.9%
Valuables
-92.0%
127.1%
Discrepancies
Source: CSO; ICRA Analysis
Q1FY13
3.8%
2.0%
8.3%
7.2%
3.9%
-5.0%
-4.6%
51.1%
-57.6%
-116.1%
Q2FY13
2.7%
2.0%
8.0%
5.2%
13.8%
1.8%
-1.0%
51.6%
-6.5%
-162.1%
Q3FY13
4.1%
4.6%
1.9%
-2.1%
-0.3%
7.4%
6.0%
48.8%
-13.4%
283.9%
2011-12
6.3%
8.0%
8.6%
15.3%
21.5%
1.5%
4.4%
-30.6%
6.6%
-100.3%
9M 2012-13
3.6%
2.9%
5.7%
3.3%
5.6%
1.4%
0.1%
50.5%
-28.1%
-97.8%
ICRA LIMITED
P a g e |7
ANNEXURE B:
Chart 11: Growth in GDP at factor cost (constant 2004-05 prices)
12%
Chart 12: Growth in Agriculture & Allied Activities (constant 2004-05 prices)
9%
8%
10%
7%
8%
6%
5%
6%
4%
4%
3%
2%
2%
1%
0%
0%
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2012-13
AE
9M
12%
10%
10%
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2012-13
AE
9M
ICRA LIMITED
P a g e |8
10%
8%
7%
8%
6%
6%
5%
4%
4%
3%
2%
2%
1%
0%
0%
16%
16%
14%
14%
12%
12%
10%
10%
8%
8%
6%
6%
4%
4%
2%
2%
0%
0%
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2012-13
AE
9M
ICRA LIMITED
P a g e |9
ICRA Limited
An Associate of Moody's Investors Service
CORPORATE OFFICE
Building No. 8, 2nd Floor, Tower A; DLF Cyber City, Phase II; Gurgaon 122 002
Tel: +91 124 4545300; Fax: +91 124 4545350
Email: info@icraindia.com, Website: www.icra.in
REGISTERED OFFICE
1105, Kailash Building, 11th Floor; 26 Kasturba Gandhi Marg; New Delhi 110001
Tel: +91 11 23357940-50; Fax: +91 11 23357014
Branches: Mumbai: Tel.: + (91 22) 24331046/53/62/74/86/87, Fax: + (91 22) 2433 1390 Chennai: Tel + (91 44) 2434 0043/9659/8080, 2433 0724/ 3293/3294, Fax
+ (91 44) 2434 3663 Kolkata: Tel + (91 33) 2287 8839 /2287 6617/ 2283 1411/ 2280 0008, Fax + (91 33) 2287 0728 Bangalore: Tel + (91 80) 2559 7401/4049 Fax
+ (91 80) 559 4065 Ahmedabad: Tel + (91 79) 2658 4924/5049/2008, Fax + (91 79) 2658 4924 Hyderabad: Tel +(91 40) 2373 5061/7251, Fax + (91 40) 2373
5152 Pune: Tel + (91 20) 2552 0194/95/96, Fax + (91 20) 553 9231
Copyright, 2013 ICRA Limited. All Rights Reserved.
All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although reasonable care has been taken to ensure that the
information herein is true, such information is provided 'as is' without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or
implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein must be construed solely as statements of opinion, and ICRA
shall not be liable for any losses incurred by users from any use of this publication or its contents.
ICRA LIMITED
P a g e | 10