India’s GDP likely grew 7% in September quarter, surpassing RBI’s projections: ICRA estimates

The Indian economy is anticipated to have expanded by 7% during the second quarter of the current fiscal year, surpassing the projection of the Reserve Bank of India's rate-setting panel, research firm ICRA was quoted as saying by The Economic Times.

ICRA said in its report that India's economic growth is anticipated to have eased to 7% in the second quarter, following a 7.8% growth in the first quarter. This adjustment is attributed to a normalizing base and unpredictable monsoon patterns.

“Looking ahead, uneven rainfall, narrowing differentials with year-ago commodity prices, the possible slowdown in momentum of government capex as we approach the Parliamentary Elections, weak external demand and the cumulative impact of monetary tightening are likely to translate into lower GDP growth in H2FY24," said Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA.

She further added, “As a result, we maintain our FY2024 GDP growth estimate at 6.0%, lower than the MPC’s projection of 6.5% for the fiscal.”

During the second quarter, investment activity in the country sustained its strength, with seven out of eleven investment-related indicators showing improved year-on-year growth compared to the first quarter, the report highlighted.

"While the YoY growth in the remaining four indicators weakened in Q2 FY2024 relative to Q1, all of them witnessed a double-digit expansion in the quarter, including the CV registrations (+13.5 per cent), cement production (+10.2 per cent), the states’ capital outlay and net lending (+33.5 per cent), and the Government of India’s (GoI’s) capex (+26.4 per cent)," ICRA said in its note.

According to data, the Center's annual gross capital expenditure rose by 26.4% to  ₹2.1 lakh crore in the second quarter, a decrease from the  ₹2.8 lakh crore recorded in the first quarter.

Construction activity sustained robust momentum in the second quarter, despite below-average rainfall causing comparatively fewer disruptions than historical patterns, according to ICRA.

“With a slowdown in national highway construction, the GVA growth of this sub-sector is likely to have eased to 7.0% in Q2FY24 from 7.9% in Q1FY24," the note said.