ICRA predicts 8.5 pc GDP growth rate

The country's economic growth will accelerate to 8.5 per cent in the April-June period of the current fiscal as compared to 6.1 per cent growth rate witnessed in the preceding January-March quarter, ICRA Ratings stated in a report. The faster growth is attributed to a supportive base and also a recovery in the services sector. Though its estimate is higher than the RBI's forecast of 8.1 per cent, ICRA's chief economist Aditi Nayar informed that the second half of the fiscal is likely to witness headwinds, which will prove a dampener. Erratic rainfall, narrowing differentials with year-ago commodity prices, and possible slowdown in momentum of government capex as the country approaches the Parliamentary elections, will limit the growth, and would maintain it at 6 percent real GDP growth estimate for FY24 which is lower than RBI's 6.5 per cent. In the first quarter, unseasonal heavy rains, lagged effects of the monetary tightening and weak external demand exerted a downward pressure on GDP growth. Factors like a continued catch-up in services demand and improved investment activity, particularly a welcome front-loading in government capital expenditure, and sharply lower prices of various commodities which expanded margins in some sectors boosted growth in the June quarter.