ICRA Revises Upwards FY24 GDP Growth Forecast To 6.5%

Domestic rating agency ICRA on Monday revised its FY24 GDP growth forecast to 6.5% from 6.2% earlier.

However, the revised forecast is still much lower than the Reserve Bank of India's (RBI's) 7% real Gross Domestic Product (GDP) growth estimate for the ongoing fiscal.

Earlier this month, the RBI had revised upwards its GDP estimate to 7% from 6.5%, calling the revised number a "conservative" one.

The rating agency did not specify reasons for the lower growth estimate made in its business activity monitor.

The revision is being done because Icra feels the deflation in commodity prices will be sustained and there are expectation of better growth in the October-December period than previous estimates, it said.

"The festive-led uptick in volume growth in high frequency non-agri indicators as evinced by ICRA Business Activity Monitor in October-November 2023 (11.3% versus the 9.5% in Q2FY24) leads us to believe that the GDP growth is likely to fare better in Q3 FY2024 than what we had penciled in," it said.

It added that the global commodity prices have remained benign in the ongoing quarter, partly owing to growing demand concerns from China, adequate supplies for commodities like crude oil, and normalisation of supply chains.

While October and November have seen higher activity, the early trends for December are mixed, the agency said, pointing to a moderation in electricity demand growth, a rise in daily vehicle registrations, and a contraction in diesel sales.