New Delhi: India Ratings and Research (Ind-Ra), a leading domestic credit rating agency, has projected the country’s GDP growth rate for the fourth quarter (January-March 2024) of the previous fiscal year 2023-24 at 6.7 per cent.
For the full 2023-24 financial year, Ind-Ra anticipates the GDP growth to range between 6.9 to 7 per cent, according to Sunil Kumar Sinha, Principal Economist, Ind-Ra, as reported by PTI.
The government is scheduled to release the official GDP figures for Q4 FY24 and provisional estimates for FY24 on May 31st. In the preceding three quarters, India’s economy exhibited robust expansion, clocking 8.2 per cent in Q1, 8.1 per cent in Q2, and a surprising 8.4 per cent in Q3 of FY24.
Sinha attributed the high growth rates in Q1 and Q2 to the low base effect from the previous year.
However, he noted the divergence between GDP and GVA (Gross Value Added) growth in Q3, with the former accelerating to 8.4 per cent while the latter stood at 6.5 per cent.
This wedge, Sinha explained, stemmed from higher tax collections during the quarter, a phenomenon unlikely to recur in Q4.
“When we analyse the data, then what is visible is the wedge between the GVA and GDP. A large impetus to Q3 GDP has come from higher tax collection, but this phenomenon is unlikely to be repeated in the fourth quarter,” Sinha stated.
The wedge between the GDP and GVA is unlikely to be repeated in the fourth quarter,” he added.
For the current fiscal year 2024-25, Ind-Ra projects the GDP growth at 7.1 per cent, with the services sector expected to maintain its momentum, led by construction and electricity.
However, mining and industrial output may lag behind. Sinha highlighted that a potential revival in rural demand, contingent on the IMD’s forecast of an above-normal monsoon, could support broad-based consumption growth.
The Reserve Bank of India (RBI), in its April monetary policy review, had pegged the GDP growth for FY24 at 7 per cent.
Meanwhile, the Finance Ministry’s recent monthly economic review cited resilient growth, robust economic activity indicators, price stability, and steady external sector performance as factors underpinning India’s promising economic trajectory amid global uncertainties.
International organisations and the RBI have issued positive assessments of India’s growth outlook for the current financial year, reinforcing the nation’s status as the fastest-growing major economy globally.
