ICRA has revised its forecast for India’s FY2024 GDP growth to 6.5 per cent from 6.2 per cent.
Despite the upward revision, ICRA’s GDP growth projection remains lower than the monetary policy committee’s revised forecast of 7 per cent for FY24.
The credit rating agency said that global commodity prices have remained benign in the ongoing quarter, with the Bloomberg Commodity Index trending 10.2 per cent lower than the year-ago levels in Q3 (October-December) FY24 (till December 15), similar to the extent of deflation seen in Q2 (July-September) FY24.
“The sustenance of deflation in commodity prices in Q3 FY24 is likely to continue to favour margins of some sectors such as manufacturing.
“This, combined with the festive-led uptick in volume growth in high frequency non-agri indicators as evinced by ICRA Business Activity Monitor in October-November 2023 leads us to believe that the GDP growth is likely to fare better in Q3 FY24 than what we had previously penciled in,” the agency said in a report.
The ICRA Business Activity Monitor reported an uptick in year-on-year (YoY) growth to 11.3 per cent in October-November FY24 (+10.3 per cent in October-November FY23) from 9.5 per cent in Q2 FY24 (+12.2 per cent in Q2 FY23), suggesting that the growth momentum remained strong in the first two months of the ongoing quarter.
As many as eight of the 14 available indicators witnessed an uptick in their YoY performance in October-November FY24 relative to Q2 FY2024, partly supported by the festive-led healthy demand for goods and mobility.