ICRA Predicts Slower GDP Growth For India

ENA Economy 2024-08-23 17:24:18 New Delhi, Aug 23 (KNN) India's economic growth is expected to decelerate to a six-quarter low in the first quarter of fiscal year 2025, according to a recent report by rating agency ICRA. The agency forecasts year-on-year GDP expansion to fall to 6.0 per cent in Q1 FY2025, down from 7.8 per cent in the previous quarter. This projection stands in contrast to the Reserve Bank of India's more optimistic forecast of 7.1 per cent growth for the same period. ICRA attributes the slowdown to several factors, including a contraction in government capital expenditure and a decline in urban consumer confidence. Aditi Nayar, Chief Economist and Head of Research & Outreach, ICRA, noted, Lower volume growth combined with diminishing gains from commodity prices weighed upon the profitability of some of the industrial sectors. The report highlights temporary lulls in certain sectors due to the Parliamentary elections and sluggish government capital expenditure at both central and state levels. Additionally, urban consumer confidence showed an unexpected downturn in May and July 2024, according to the RBI's Consumer Confidence Survey. ICRA also points to the lingering effects of last year's unfavourable monsoon and an uneven start to the 2024 monsoon as factors preventing broader improvement in rural sentiment. The agency projects gross value added (GVA) growth to ease to 5.7 per cent in Q1 FY2025 from 6.3% in the previous quarter. This decline is expected to be driven by the industrial sector, with a mild easing in services expansion and a slight uptick in agricultural GVA growth. The gap between GDP and GVA growth is anticipated to narrow to 30 basis points in Q1 FY2025, compared to 148 basis points in the previous quarter. This reduction is attributed to an expected lower expansion in net indirect taxes due to changes in government subsidy outgo. While a heatwave negatively impacted footfall in various service sectors, it provided a significant boost to electricity demand. ICRA concludes that these factors collectively point to a transient moderation in India's economic growth for the first quarter of FY2025. (KNN Bureau) 39049 https://knnindia.co.in/news/newsdetails/economy/icra-predicts-slower-gdp-growth-for-india 2024-08-23 17:24:18 knnindia.co.in ICRA Predicts Slower GDP Growth For India