ICRA revises FY24 GDP growth forecast to 6.5%, still below RBI's estimate

Domestic rating agency Icra on Monday revised its FY24 GDP growth forecast to 6.5 per cent from 6.2 per cent earlier.

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

Earlier this month, the RBI had revised upwards its GDP estimate to 7 per cent from 6.5 per cent, 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 per cent versus the 9.5 per cent 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.