The Indian economy is expected to have risen by 7% in the second quarter of the current fiscal year, above the Reserve Bank of India's rate-setting panel's forecast, according to research firm ICRA, as stated by The Economic Times.
According to CRA's study, India's economic growth is expected to slow to 7% in the second quarter, down from 7.8% in the first. This change is due to a normalizing foundation and variable 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 at ICRA and head
She went on to say: "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." The country's investment activity remained strong in the second quarter, with seven out of eleven investment-related indicators showing improved year-on-year growth compared to the first quarter, according to the study.
"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)," the ICRA said in its report.
According to ICRA, construction activity was robust in the second quarter, despite below-average rainfall generating fewer disruptions than in previous years. "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 report added.
