{"id":155866,"date":"2023-08-25T13:17:02","date_gmt":"2023-08-25T07:47:02","guid":{"rendered":"https:\/\/www.gkseries.com\/blog\/?p=155866"},"modified":"2023-08-25T13:17:03","modified_gmt":"2023-08-25T07:47:03","slug":"icra-forecasts-indias-gdp-growth-of-8-5-in-q1-2023","status":"publish","type":"post","link":"https:\/\/www.gkseries.com\/blog\/icra-forecasts-indias-gdp-growth-of-8-5-in-q1-2023\/","title":{"rendered":"ICRA Forecasts India\u2019s GDP Growth of 8.5% in Q1, 2023"},"content":{"rendered":"\n

ICRA Forecasts India\u2019s GDP Growth of 8.5% in Q1, 2023: <\/strong>ICRA Ratings recently released a comprehensive report projecting a robust economic growth for India in the first quarter of the fiscal year 2023 (FY24). According to the survey, the country’s GDP growth rate is predicted to accelerate to 8.5% during the April-June period, a major increase from the 6.1% growth rate seen in the preceding quarter (January-March). This projected growth is attributed to multiple factors, including a supportive base effect and a notable recovery in the services sector.<\/p>\n\n\n\n

Daily Current Affairs Quiz: August 2023<\/a><\/p>\n\n\n\n

Basis for Optimism: Supportive Base and Services Sector Recovery<\/strong><\/p>\n\n\n\n

The projected growth of 8.5% for Q1 FY24 is primarily attributed to two key factors:<\/strong><\/p>\n\n\n\n

    \n
  1. Supportive Base Effect:<\/strong> A supportive base effect is predicted to raise the growth rate, implying that the comparison is made against a lower growth rate in the same time the previous year.<\/li>\n\n\n\n
  2. Services Sector Recovery:<\/strong> The services sector, a significant contributor to India\u2019s economy, is anticipated to exhibit a noteworthy recovery. The report indicates that a continued catch-up in services demand and improved investment activity have positively impacted growth.<\/li>\n<\/ol>\n\n\n\n

    Divergence from RBI\u2019s Forecast and Potential Headwinds<\/strong><\/p>\n\n\n\n

    Although ICRA\u2019s growth projection of 8.5% for Q1 FY24 is higher than the Reserve Bank of India\u2019s (RBI)<\/strong> forecast of 8.1%, the report does highlight potential challenges in the second half of the fiscal year:<\/p>\n\n\n\n

      \n
    1. Upcoming Headwinds:<\/strong> The report anticipates headwinds in the latter half of the fiscal year, which could potentially dampen the overall growth trajectory.<\/li>\n\n\n\n
    2. Factors Contributing to Headwinds:<\/strong> As hurdles to sustainable growth, irregular rainfall patterns, decreasing differentials with commodity prices compared to the previous year, and a potential slowdown in government capital expenditure as the country approaches parliamentary elections have been cited.<\/li>\n<\/ol>\n\n\n\n

      FY24 Growth Estimate and Factors Influencing It<\/strong><\/p>\n\n\n\n

      ICRA\u2019s Chief Economist, Aditi Nayar, maintains her estimate of 6% real GDP growth for the full fiscal year FY24, which is slightly lower than RBI\u2019s forecast of 6.5%.<\/p>\n\n\n\n

      The reasons for this estimate include:<\/p>\n\n\n\n

        \n
      1. Risks to Growth:<\/strong> The aforementioned headwinds, including uncertain monsoon patterns and potential disruptions related to commodity prices, are expected to limit the overall growth rate.<\/li>\n\n\n\n
      2. Government Capex Impact:<\/strong> The momentum of government capital expenditure is likely to be affected as the parliamentary elections draw closer, potentially impacting overall economic growth.<\/li>\n<\/ol>\n\n\n\n

        Sectoral Analysis: Services Sector and Capital Expenditure<\/strong><\/p>\n\n\n\n

          \n
        1. Services Sector Growth:<\/strong> The report highlights the services sector’s impressive development, with gross value added growth expected to increase to 9.7% in Q1 FY24 from 6.9% in Q4 FY23. Notably, 11 out of 14 high-frequency indicators related to the services sector recorded positive growth during the quarter.<\/li>\n\n\n\n
        2. Capital Expenditure Expansion:<\/strong> The gross fixed capital formation (GFCF) is expected to witness a double-digit expansion in Q1 FY24. This projection is based on the strong year-on-year growth performance of various investment-related indicators.<\/li>\n\n\n\n
        3. Government Capital Expenditure:<\/strong> The report indicates a substantial increase in the aggregate capital outlay and net lending of 23 state governments and the Government of India for Q1 FY24. These figures show a growth of 76% and 59.1% respectively, indicating increased capital expenditure.<\/li>\n<\/ol>\n\n\n\n

          Electricity Generation and Its Implications<\/strong><\/p>\n\n\n\n

            \n
          1. Electricity Generation Dip:<\/strong> While many sectors exhibited growth, electricity generation experienced a decline, reaching an 11-quarter low of 1.3% in Q1 FY24. This drop is attributed to an unfavorable base effect and excessive rainfall during the first half of the quarter.<\/li>\n<\/ol>\n\n\n\n

            External Borrowings and Commodity Prices<\/strong><\/p>\n\n\n\n

              \n
            1. Capex-related Borrowings:<\/strong> External commercial borrowings for capital expenditure, aimed at modernization and new projects, saw a significant increase in Q1 FY24, surpassing the levels of the entire FY23.<\/li>\n\n\n\n
            2. Commodity Price Impact:<\/strong> Lower commodity prices have increased profit margins in several sectors, contributing to the rise seen during the quarter.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

              ICRA Forecasts India\u2019s GDP Growth of 8.5% in Q1, 2023: ICRA Ratings recently released a comprehensive report projecting a robust economic growth for India in the first quarter of the fiscal year 2023 (FY24). According to the survey, the country’s GDP growth rate is predicted to accelerate to 8.5% during the April-June period, a major […]<\/p>\n","protected":false},"author":894,"featured_media":155867,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5142],"tags":[239,1424],"offerexpiration":[],"class_list":["post-155866","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs-august-2023","tag-economic-growth","tag-gdp-growth"],"_links":{"self":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/users\/894"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/comments?post=155866"}],"version-history":[{"count":1,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155866\/revisions"}],"predecessor-version":[{"id":155868,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/155866\/revisions\/155868"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media\/155867"}],"wp:attachment":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media?parent=155866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/categories?post=155866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/tags?post=155866"},{"taxonomy":"offerexpiration","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/offerexpiration?post=155866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}