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India's GDP growth to moderate to 6.7% in Q4 FY24: ICRA

22 May '24

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India's GDP growth to moderate to 6.7% in Q4 FY24: ICRA

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India's GDP growth is forecast to moderate to 6.7 per cent YoY in Q4 FY24, down from 8.4 per cent in Q3, according to ICRA.
GVA growth is expected to ease to 5.7 per cent from 6.5 per cent.
The slowdown is driven by industrial sector declines.
The GDP-GVA growth gap is anticipated to reduce to 100 bps.
Full-year FY24 GDP growth is projected at 7.8 per cent.

India’s GDP growth is forecast to moderate to 6.7 per cent year-on-year (YoY) in the fourth quarter of fiscal 2024 (Q4 FY24), down from 8.4 per cent in Q3 FY24, according to the latest projection by India-based credit rating agency ICRA. Similarly, the growth in gross value added (GVA) is expected to ease to 5.7 per cent in Q4 FY24 from 6.5 per cent in the previous quarter. This decline is driven by slowdown in the industrial sector (to 7.9 per cent from 10.4 per cent).

The gap between GDP and GVA growth is anticipated to moderate to approximately 100 basis points (bps) in Q4 FY24, compared to the particularly high 185 bps recorded in the previous quarter. For the full fiscal 2024, ICRA expects GDP growth to be 7.8 per cent and GVA growth to be 7 per cent, assuming no revisions are made to the growth figures for the first nine months of FY24.

ICRA estimates a broad-based moderation in industrial GVA growth to 7.9 per cent in Q4 FY24 from 10.4 per cent in Q3 FY24, led primarily by a slowdown in the manufacturing sector (to 8 per cent from 11.6 per cent). Quarterly results from a sample of listed manufacturing companies indicate a slight easing in profit margins in Q4 FY24 compared to Q3.

Investment activity in Q4 FY24 remained healthy, despite mixed trends in various investment-related indicators. There was a surge in new project announcements to the second-highest quarterly level, spurred by state investor meets in January 2024 and a notable increase in project completions by both private and government sectors. However, some investment-related indicators showed a moderation in Q4 FY24 compared to Q3, alongside an implicit slowdown in new project proposals in February-March 2024 relative to January 2024.

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