India's Q1 GDP growth may hit one-year high banking on capex spike, services activity: Economists
India's economy in April to June likely grew at the fastest pace in a year, bolstered by central and state governments opening up their wallets for capex, stronger consumption demand and higher activities in the services sector, according to some economists.
A median forecast of an ET poll of 20 economists pegged the growth rate at 7.8 per cent for the first quarter of this financial year that started Apr. 1.
The estimated range in the poll was 7.5-8.5 per cent. The Reserve Bank of India has forecast a growth rate of 8 per cent.
While India’s GDP grew 6.1 per cent in the March quarter of FY23, it had grown at 7.2 per cent in FY23 as a whole.
Continued improvement in services demand and investment activity, and lower commodity prices spurred growth while unseasonal heavy rains, a lagged effect of the monetary tightening and weak external demand exerted a downward pressure on GDP growth in Q1FY24.
Services lead the way
Economists have opined that India’s services sector likely took the front seat, a trend seen in the last quarter of FY23.
«High-frequency indicators for air and rail travel confirm continued steady demand in the transport sector, although capacity constraints, along with a catchup to pre-Covid levels of activity, mean some moderation in momentum compared with the previous quarter,» said Rahul Bajoria, head, EM Asia, ex-China, economics, Barclays.
The firm has pegged a growth rate of 7.8 per cent.
India’s services sector growth had hit a 13-year high in July, data from S&P Global PMI showed. ICRA in its report estimated that the services' gross value added (GVA) likely grew 9.7 per cent in Q1FY24 from 6.9 per cent in Q4FY23.
«Economic activity in Q1 FY-2024 was boosted by a continued catch-up in services
