India's GDP growth to ease to 6.5% in Q2 FY25: ICRA

Further, the growth in gross value added (GVA) is estimated to ease to 6.6 per cent in Q2 FY25 from 6.8 per cent in Q1, driven by the industrial sector (to 5.5 per cent from 8.3 per cent), amid a pick-up in the expansion in services and agricultural GVA, an ICRA release said.

ICRA estimates that the growth in net indirect taxes (in nominal terms) rose slightly to 9-9.5 per cent in Q2 FY25 from 8 per cent in Q1. Given this, the GDP-GVA growth wedge (in real terms) is expected to remain inverted in Q2 FY25 as well.

“The benefits of the healthy monsoons lie ahead, with upbeat kharif output and replenished reservoirs likely to lead to a sustained improvement in rural sentiment. In addition, there is considerable headroom for the GoI’s capital expenditure, which needs to expand by 52 per cent in YoY terms in H2 [the second half] FY2025 to meet the Budget Estimate for the full year,” said Aditi Nayar, chief economist and head of research and outreach at ICRA.

ICRA expects a back-ended pick-up in economic activity to boost the GDP and GVA growth in H2 FY25, resulting in a full-year expansion of 7 per cent and 6.8 per cent respectively, added Nayar.

ICRA estimates the industrial GVA growth to record a broad-based moderation to 5.5 per cent in Q2 FY25 from 8.3 per cent in Q1. The GVA for manufacturing is expected to reach 5.5 per cent in Q2 FY25 from 7 per cent in Q1.

India’s investment activity improved in Q2 FY25 over Q1, while remaining sluggish amid slow execution of infrastructure projects owing to surplus monsoon rains.

Fibre2Fashion News Desk (DS)