India’s GDP growth rate is the highest among the big countries of the world. The kind of projections being made for the second quarter are much better. That too at a time when estimates were that there could be a decline in both the country’s imports and exports. The havoc of El Nino can be seen. Even after that, in the second quarter, the country’s growth did not have the negative impact that was being speculated. Rating agency ICRA has estimated that the country’s GDP growth could be 7 percent in the second quarter. The special thing is that this estimate is higher than the RBI estimate. Whereas ICRA’s estimate for the current financial year is less than RBI’s estimate. Let us also tell you how India’s GDP has been estimated.
Estimates for the second quarter
ET has quoted research firm ICRA as saying that the Indian economy is expected to grow by 7 percent during the second quarter of the current financial year, which is less than the RBI estimate. ICRA said in its report that after 7.8 percent growth in the first quarter, India’s economic growth is expected to decline to 7 percent in the second quarter. Aditi Nair, Chief Economist and Research Head, ICRA, said uneven rainfall, narrow gap with year-ago commodity prices, reduction in capex as parliamentary elections are approaching, weak external demand and monetary tightening have slowed down GDP growth. Shortage may be seen. He further said that for this reason the GDP growth estimate for the financial year 2024 has also been kept at 6 percent. This estimate of ICRA is less than RBI’s estimate of 6.5 percent.
7 out of 11 indicators better
The report said that during the second quarter, investment activity in the country remained strong, with seven out of 11 investment-related indicators showing better year-on-year growth compared to the first quarter. He said that the remaining four indicators have shown weakness as compared to the first quarter. All those indicators saw double digit growth, including CV registrations (13.5 per cent), cement production (10.2 per cent), states’ capex and net loan (33.5 per cent), and Government of India’s capex (26.4 per cent).
Decline in construction activity
According to the data, the Central Annual Capex of the Center increased by 26.4 percent to Rs 2.1 lakh crore in the second quarter, which is less than Rs 2.8 lakh crore recorded in the first quarter. According to ICRA, there was a surge in construction activity, that too when there was less than normal rainfall. But compared to the historical pattern, less impact was seen. Icra’s note said that with the slowdown in national highway construction, the GVA growth of this sub-sector was 7.9 percent in the first quarter, which is likely to slow down to 7 percent in the second quarter.