Momentum In Economic Activity Down In March 2024: Icra

The momentum in economic activity slowed in March 2024, with the year-on-year (YoY) growth in the Icra business activity Monitor easing to a three-month low of 8.7 per cent from 11.8 per cent in February 2024, although double-digit growth in the previous month was partly led by a higher number of working days owing to the leap year effect.

The rating agency in a report stated that as many as 13 of the 16 constituent indicators reported a deterioration in their YoY growth in March 2024 relative to February 2024.

Moreover, only five indicators witnessed a double-digit expansion in March 2024 as against 10 in the prior month.

Economic activity, as measured by the Icra grew by a healthy 8.7 per cent on a year-on-year (YoY) basis in March 2024, although this was lower than the 11.8 per cent growth seen in February 2024, which was partly boosted by the leap-year effect. In quarterly terms, the YoY growth in the Index remained robust at 10.0 in Q4 FY2024, albeit a tad lower than 10.3 per cent in Q3FY24.

Given the adverse base and the decline in the output of most rabi crops (barring wheat), Icra estimates the gross value added (GVA) growth to moderate to 5.5 to 6.0 per cent in Q4 FY24 (+6.0 per cent in Q4 FY23) from 6.5 per cent in Q3 FY24 (+4.8 per cent in Q3 FY23).

While early trends for April 2024 are favourable, and the India Meteorological Department’s (IMD’s) prediction of an above-normal monsoon augurs well for the agriculture sector, rising global commodity prices and supply disruptions amid the Iran-Israel conflict pose a risk to the growth trajectory in the near term.