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International rating agency project India’s GDP growth at 6.7%

New Delhi: International rating agency ICRA Ltd has projected   India’s GDP growth to moderate to a four-quarter low of 6.7% in  Q4 of 2024. For the full fiscal year it expects GDP growth of 7.8%.

ICRA said it expects growth in gross value added (GVA) to ease to 5.7% in Q4 from 6.5% in the previous quarter owing to lower industrial and services growth, and agricultural GVA to contract for the second straight quarter (by 0.5%) amid weak trends in the rabi output and concerns around yields. GVA is the value of goods and services produced in a country minus input costs, including raw materials. It adjusts GDP by adding subsidies and deducting taxes on products.

ICRA expects the gap between GDP and GVA growth to moderate to about 100 basis points (bps) in Q4 from 185 bps in the previous quarter.

‘This is on account of an expected lower expansion in the net indirect taxes in Q4 owing to a narrower dip in the subsidy outgo (-22.8% in Jan-Feb 2024; -53.6% in Q3 FY24). For the full-year FY24, ICRA expects the GDP and GVA growth to print at 7.8% and 7%, respectively, unless the growth for 9M FY2024 (April-December 2024) is revised,’ the rating agency said in a report.

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Meanwhile, ICRA estimates industrial GVA growth to moderate to 7.9% in Q4 from 10.4% in Q3, led by all four sub-sectors – manufacturing (to +8.0% from +11.6%), electricity (to +7.5% from +9.0%), construction (to +8.5% from +9.5%), and mining and quarrying (to +5.5% from +7.5%). This, coupled with slower growth in the Index of Industrial Production (IIP), suggests that year-on-year growth in manufacturing GVA is likely to have eased in Q4, with the adverse base (+0.9% in Q4 FY23; -4.8% in Q3 FY23) also likely to weigh on growth. Services GVA is expected to ease slightly to 6.2% in Q4 from 7%.

Earlier  the United Nations has revised upwards India’s growth projections for 2024. The World Economic Situation and Prospects released by the UN has showed this.

The 6.9 per cent economic growth projections for India in the mid-year update is an upward revision from the 6.2 per cent GDP forecast made by the UN in January this year. The UN World Economic Situation and Prospects (WESP) 2024 report that was launched in January had said that growth in India was projected to reach 6.2 per cent in 2024.

The projection in January for India’s GDP growth for 2025 remains unchanged at 6.6 per cent in the latest assessment of the economic situation.

Earlier the International Monetary Fund (IMF) has revised India’s growth forecast for 2024-25. The IMF raised  India’s GDP growth forecast to 6.8% from 6.5%. The World Economic Outlook released by IMF revealed this. The agency also revised upwards the growth figure for 2023-24 to 7.8% from 6.7% it had forecast in January. India’s own official estimates had pegged growth at 7.6%.

Earlier the Asian Development Bank (ADB) revised India’s GDP growth forecast for the current fiscal. ADB raised  India’s GDP growth forecast to 7 per cent, from 6.7 per cent earlier. In its April edition of the Asian Development Outlook, ADB said India would remain ‘a major growth engine’ in the Asia and Pacific region. For the 2025-26 fiscal, ADB has projected India’s growth at 7.2 per cent. The growth estimates for the current fiscal is lower than 7.6 per cent estimated GDP expansion in 2022-23 fiscal. ADB in December last year projected the Indian economy to expand by 6.7 per cent in the 2024-25 fiscal.



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