India's GDP growth to pick up in third quarter compared to first half of FY25: ICRA report
India's Economy Set to Grow Faster in Late 2024
According to a report by ICRA, India's economy is expected to grow more rapidly in the third quarter of the financial year 2024 (October-December) compared to the first half (April-September). This optimism is based on improving economic indicators and strong activity levels in various sectors.
Positive Economic Indicators
The report highlights that preliminary data for November 2024 shows a positive trend. Electricity demand has increased due to a favorable base effect, and the festive season has boosted vehicle registrations. ICRA expects GDP growth to pick up in Q3 FY2025 compared to H1 FY2025.
Sectoral Growth
Several indicators related to mobility and transportation have shown significant improvement. Vehicle registrations surged by 32.4% year-on-year in October 2024, recovering from an 8.7% contraction in September. This was driven by strong demand for two-wheelers and passenger vehicles. Petrol consumption rose to 8.7% from 3.0% in September, and domestic air passenger traffic increased to 9.6% from 6.4%.
Additionally, two-wheeler production grew by 13.4%, rail freight improved to 1.5% from a decline of 0.7%, and diesel consumption recorded marginal growth of 0.1% after a 1.9% contraction in September.
Strong Export Performance
Non-oil exports also performed well, growing by 25.6% in October 2024 compared to 6.8% in September. Key contributors to this growth include electronic goods, engineering goods, chemicals, and readymade garments.
Business Activity Monitor
ICRA's Business Activity Monitor, a composite indicator of economic activity, showed a year-on-year growth of 10.1% in October 2024, the highest in eight months. This is an improvement from the 6.6% growth recorded in September 2024, despite challenges from a high base effect.
The positive trends across various sectors reflect India's economic resilience and reinforce expectations of stronger GDP growth in the coming months.
Doubts Revealed
ICRA
ICRA is a company in India that gives ratings and reports about how well businesses and the economy are doing. They help people understand if it's a good time to invest or do business.
Economic indicators
Economic indicators are signs or data that show how well the economy is doing. Examples include things like how many people have jobs, how much electricity is being used, and how many cars are being sold.
Vehicle registrations
Vehicle registrations refer to the process of officially recording a vehicle with the government. It shows that more people are buying cars, which is a sign that the economy is doing well.
Non-oil exports
Non-oil exports are goods that a country sells to other countries, excluding oil. In this case, India is selling more electronic and engineering goods to other countries.
Business Activity Monitor
The Business Activity Monitor is a tool used by ICRA to measure how active and busy businesses are. A 10.1% growth means businesses are doing more work and making more money.
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