Recovery on Anvil

The agencies have also expressed hope that the economy is likely to gain momentum in the second quarter of the fiscal. “The outlook for H2, FY2025 is buoyant, with a likely improvement in rural demand owing to the robust kharif output and upbeat outlook for rabi crops amid replenished reservoir levels, as well as expectations of a back-ended pick up in the government of India’s capital spending amid the significant headroom to meet the budgeted target for FY2025,” said the ICRA report.

“While economic activity displayed a strong growth in October 2024, boosted by the festive demand, ICRA remains watchful of the impact of a slowdown in personal loan growth on private consumption as well as geopolitical developments on commodity prices and external demand,” the report said.

ICRA expects the back-ended pick-up in economic activity to boost the GDP and GVA growth in H2 FY2025, resulting in a full-year expansion of 7.0% and 6.8%, respectively. “The blip in Growth in Q2 might be an Impasse, tailwinds of recovery is now reinvigorated by a surge in rural demand, a proxy of better income levels,” said SBI while also calling for better capturing of soft data need of the hour as the shift towards Q-commerce has accentuated in urban areas.

“High-frequency indicators indicate that aggregate demand continued to grow (albeit with a slower momentum than in the preceding quarters and painting a somewhat mixed picture). For instance, domestic passenger vehicle sales, which are an indicator of urban demand as well as other indicators of consumption and demand such as diesel consumption, electricity demand and bitumen consumption have eased. Transport and Communication indicators viz. passenger and freight traffic at airports and toll collection are showing traction,” it added.

India Q2 GDP

India's Q2 GDP growth to be muted, revival likely in H2 FY25