ICRA projects India's Q1FY24 GDP growth at 8.5 pc, higher than RBI's estimate

“We peg GDP growth in Q1 FY2024 at 8.5%, exceeding the Monetary Policy Committee’s (MPC’s) forecast of 8.0%. However, we are circumspect that erratic rainfall, narrowing differentials with year-ago commodity prices, and a possible slowdown in momentum of government capex as we approach the Parliamentary elections, could dampen GDP growth in H2 FY2024 below the MPC’s forecasts," ICRA Chief Economist Aditi Nayar said on Tuesday.

The rating agency expects the full FY24 GDP growth at 6%, lower than the MPC’s projection of 6.5%.

The National Statistical Office (NSO) is set to release the GDP estimates for the April-June quarter of 2023-24 on August 31, 2023.

India's real GDP grew at 6.1% year-on-year in the January-March quarter of FY23 (Q4FY23) to reach Rs 43.62 lakh crore, as against Rs 41.12 lakh crore in Q4 2021-22.

ICRA has projected the gross fixed capital formation (GFCF) expansion in Q1 FY24 in double digits, based on the robust YoY growth performance of a majority of the investment-related indicators. The rating agency estimates the services GVA (gross value added) YoY growth to have risen to 9.7% in Q1 FY2024 from 6.9% in Q4 FY2023.

"As many as 11 of the 14 high-frequency indicators pertaining to the services sector recorded a YoY growth in Q1 FY2024, with the pace of expansion ranging from 0.3% (telephone subscribers) to 18.6% (domestic airlines passenger traffic). In contrast, indicators such as CV sales (-3.3%) and air cargo traffic (-0.4%) saw a mild YoY contraction in Q1 FY2024," it said.

With UNI inputs