India’s economy is expected to grow by 6.9 per cent in the second quarter of the current financial year, surpassing the 6.7 per cent growth rate recorded in the first quarter, highlighted a report by Bank of Baroda.
The report stated that this projected increase in GDP in the second quarter is fueled by strong domestic demand and positive trends in high-frequency economic indicators.
“On the domestic front, GDP data for Q2 is awaited, and we expect growth at 6.9 pc versus 6.7 pc in Q1” the report said.
With the festive season, which began in September and extended through October, demand across various sectors has picked up noticeably. This revival is evident in the uptick in air passenger traffic volumes and a rise in the Services Purchasing Managers’ Index (PMI), both indicating robust activity in the services sector.
The report also added that toll collections, vehicle registrations, and non-oil, non-gold imports have also gained momentum towards the end of Q2 and the start of Q3, reflecting increased mobility and consumer activity.
Additionally, government spending, both by central and state administrations, has contributed to this economic acceleration.
The report data also highlighted a recovery in digital payments, auto sales, and other consumption metrics. Manufacturing and services PMI data both showed improvement, suggesting a balanced expansion across major sectors.
The Reserve Bank of India’s (RBI) consumer confidence report in September further reflected steady sentiments among households.
Rural demand has seen a boost too, with notable rebounds in two-wheeler and tractor sales.
Despite these positive signs, inflationary pressures remain persistent, as indicated by price data for October. Due to this and steady growth, the RBI is likely to maintain interest rates in its December policy meeting, although a rate cut might be considered by February 2025.
A slight slowdown in credit growth across sectors is a factor to watch, as it may impact the overall economic momentum in the coming quarters.
Overall, a combination of festive demand, improved consumer confidence, and positive rural and urban indicators suggests a favorable growth outlook, positioning India’s economy for steady expansion in the latter half of the year.
India’s GDP data for the second quarter (Q2) of 2024 will be released on November 29. The Ministry of Statistics and Programme Implementation (MoSPI) will release the data.