India's GDP growth likely at 8.5% in the first quarter: ICRA
- IBEF
- August 23, 2023
In a report published, ICRA Ratings predicted that India's economic growth will pick up speed in the April-June quarter of the current fiscal year, rising from 6.1% growth during the January-March quarter to 8.5%. ICRA attributed the quicker rise to both a recovering services sector and a solid foundation.
ICRA’s Chief Economist, Ms. Aditi Nayar, stated that while the estimate is higher than the RBI's expectation of 8.1%, headwinds are likely to occur in the second half of the fiscal year, which would act as a dampener.
The June quarter's growth was helped, according to her, by a number of factors including the demand for services continuing to catch up, better investment activity—particularly a welcome front-loading of government capital expenditure—and dramatically lower commodity prices, which allowed for the expansion of margins in certain industries.
The agency estimated that, given the strong year-over-year growth performance of most investment-related indicators, the gross fixed capital formation (GFCF) expansion in Q1 of FY24 would be in double digits.
The government of India's gross capital spending increased by 59.1% to Rs. 2.8 lakh crore (US$ 34 billion) and the combined capital outlay and net lending of 23 state governments (apart from Arunachal Pradesh, Assam, Goa, Manipur, and Meghalaya) by a sharp 76% to Rs. 1.2 lakh crore (US$ 14 billion) in Q1 of FY24, it added.
According to the report, capex-related external commercial borrowings for modernisation, new projects, local capital goods purchases, and imports increased to US$ 13.0 billion in Q1 from US$ 9.6 billion for the entire FY23 year.
The estimated gross value-added growth for services increased from 6.9% in Q4 of FY23 to 9.7% in Q1 of FY24. Additionally, 11 out of 14 high-frequency indicators related to the services sector showed growth in the quarter.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Partners
