India GDP growth moderates to 6% in Q1 FY25: ICRA: Rediff Moneynews

New Delhi, Aug 22 (PTI) ICRA on Thursday forecast India’s economic growth to moderate in April-June, hitting a six-quarter low of 6 per cent, due to a reduction in government investment spending and a drop in urban consumer demand.

ICRA projects GDP to grow at 6.8 per cent in the full fiscal year 2024-25, down from 8.2 per cent recorded in 2023-24.

“ICRA projects year-on-year (YoY) GDP growth to moderate to the lowest in six quarters at 6 per cent in Q1 FY25, from 7.8 per cent in Q4 FY24, amid a moderation in government capital expenditure and declining consumer confidence in urban areas,” the national rating agency said in a statement.

The official economic growth data for the June quarter will be released by MoSPI (Ministry of Statistics and Programme Implementation) on August 30.

Growth in the June quarter (Q1) of 2023-2024 was 8.2 percent.

ICRA Chief Economist Aditi Nayar said there was a temporary lull in some sectors in the second quarter of the current fiscal due to the general elections and weak capital expenditure by the central and state governments.

She further said urban consumer confidence saw a surprise dip, as per the Reserve Bank of India’s consumer confidence survey. Meanwhile, the lingering impact of last year’s unfavourable monsoon and an uneven start to monsoon in 2024 have prevented a broader improvement in rural sentiment.

“Lower volume growth combined with falling commodity price gains impacted profitability in some industry sectors.

“The heatwave also affected customer footfall across service sectors, even as it significantly increased electricity demand. Overall, we expect a temporary slowdown in India’s GVA (gross value added) and GDP (gross domestic product) growth in Q1 FY25 to 5.7 per cent and 6 per cent, respectively,” Nayar said.

For full-year fiscal 2025, ICRA expects a delayed recovery in economic activity to boost GDP and GVA growth to 6.8 per cent and 6.5 per cent, respectively.

In particular, there is significant headroom for the Government of India’s capital expenditure, which needs to grow by 39 per cent year-on-year in July-March FY2025 to meet the full-year budget estimates. This is expected to push GDP growth back above 7 per cent in the second half of FY2025, Nayar added.