Rating agency ICRA said India’s GDP growth is likely to slow to a six-quarter low of 6% in the April-June period, citing a decline in urban consumer confidence levels as well as a decline in government capital expenditure.
Gross value added (GVA) in the economy is also expected to contract by 5.7% in the first quarter (Q1) of 2024-25 from 6.3% in the previous quarter, with most of the decline due to the slowdown in industrial activity.
While industry GVA growth is estimated at 6.4% in Q1, down from 8.4% in the January-March period, services GVA expansion is pegged at 6.5%, down from 6.7% in the previous three months. ICRA has projected a modest growth in agricultural GVA – from 0.6% in the last quarter of the last financial year to 1% in the first quarter.
“A surprising decline in urban consumer confidence was recorded in the May 2024 (and July 2024) rounds of the central bank’s consumer confidence survey,” ICRA Chief Economist Aditi Nair said. “The heat wave affected the number of people in various service sectors even as it increased the demand for electricity,” he said, terming the slowdown in the first quarter as a ‘transient slowdown’.
