India's Q4 GDP Growth Projected At 6.7%, FY24 Growth At 7.8 per cent, Says ICRA

The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter, and 8.4 per cent in the December quarter of 2023-24

Domestic rating agency ICRA has projected India's GDP growth to moderate to a four-quarter low of 6.7 per cent for the March quarter of the 2023-24 fiscal year. For the full 2023-24 fiscal, ICRA estimates GDP growth to be 7.8 per cent.

The Indian economy grew 8.2 per cent in the June quarter, 8.1 per cent in the September quarter, and 8.4 per cent in the December quarter of 2023-24. However, ICRA's Chief Economist, Aditi Nayar, noted that lower volume growth, along with diminishing gains from commodity prices affecting the profitability of some industrial sectors, is expected to dampen India's Gross Value Added (GVA) growth in Q4 FY2024.

India's GDP expanded by 6.1 per cent in the March quarter of the 2022-23 fiscal year, with full-year growth for 2022-23 at 7 per cent. The GDP figures for the fourth quarter (January-March 2024) and the provisional estimates for the 2023-24 fiscal year are scheduled for release on May 31.

ICRA stated that the gap between GDP and GVA growth is likely to narrow to 100 basis points (bps) in Q4 FY2024 from the particularly high 185 bps in the previous quarter. This is due to an expected lower expansion in net indirect taxes in the March quarter owing to a narrower dip in subsidy outgo.

For the full fiscal year FY2024, ICRA expects GDP and GVA growth to be 7.8 per cent and 7 per cent, respectively, unless the growth for the first nine months of FY2023-24 is revised. GDP represents the total value of goods and services produced in a given period, while GVA is GDP minus net taxes (gross tax collection minus subsidy).

"Despite the overhang of the unfavourable 2023 monsoon rains on agricultural output, there are indications of a nascent revival in rural demand," Nayar said. She highlighted that domestic retail tractor volumes expanded by 7.7 per cent year-on-year in Q4 FY2024, after a 4 per cent contraction in Q3 FY2024.