ICRA Upgrades India's GDP Growth Forecast For FY24 To 6.5%

Even as ICRA gave a revised forecast, it remained much lower than the Reserve Bank of India’s gross domestic product growth prediction of 7 per cent for the current financial year

Rating agency ICRA on Monday gave a revised GDP growth forecast for India for the current fiscal year. The domestic rating agency upgraded its growth forecast for the 2023-24 fiscal year (FY24) to 6.5 per cent, from its earlier estimate of 6.2 per cent.

Even as ICRA gave a revised forecast, it remained much lower than the Reserve Bank of India’s (RBI) gross domestic product (GDP) growth prediction of 7 per cent for the current financial year, reported PTI. Notably, earlier in December, the banking regulator upgraded its GDP growth estimate to 7 per cent from 6.5 per cent, terming the new figure a ‘conservative’ one. 

ICRA didn’t specify any reasons for the lower growth estimate given in its business activity monitor. It further noted that the revision was done as the agency felt that a weakening in commodity prices is set to continue and there are expectations of better growth in the October to December period, against previous estimates.

“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,” ICRA stated. 

The ratings agency further noted that commodity prices at the global level have remained helpful in the current quarter, due to the increasing concerns about demand from China, sufficient supplies for commodities like crude oil, and normalisation of supply chains. 

It added that October and November registered higher activity, however, the early trends for December show a mixed result, owing to a moderation in rise in electricity demand, a boost in daily vehicle registrations, and a weakening in diesel sales.