India’s economy is projected to grow at a faster pace in the third quarter of the current financial year (October-December 2024) compared to the first half (April-September 2024), according to a report by ICRA.
The report attributed this optimism to improving economic indicators and robust activity levels across various sectors. Preliminary data for November 2024 indicates a positive trend.
The report highlighted that electricity demand has picked up, aided by a favorable base effect, while festive season demand has driven an increase in vehicle registrations. “These trends reinforce ICRA’s expectations of a pick-up in the GDP growth in Q3 FY2025 as compared to H1 FY2025,” the report said.
Indicators related to mobility and transportation have shown notable improvements. Vehicle registrations surged by 32.4% year-on-year in October 2024, a sharp rebound from an 8.7% contraction in September 2024. This growth was driven by strong demand for two-wheelers and passenger vehicles.
Petrol consumption rose to 8.7% in October from 3.0% in September, while domestic air passenger traffic increased to 9.6% from 6.4%. Two-wheeler production grew by 13.4%, and rail freight showed improvement, rising by 1.5% after a 0.7% decline in September. Diesel consumption also saw marginal growth of 0.1% after contracting by 1.9% in the previous month.
India’s non-oil exports posted robust growth, increasing by 25.6% in October 2024 compared to 6.8% in September. Key sectors contributing to this growth included electronic goods, engineering goods, chemicals, and readymade garments.
ICRA’s Business Activity Monitor, a composite indicator of economic activity, recorded year-on-year growth of 10.1% in October 2024, marking the highest growth in eight months. This represents an improvement from 6.6% growth in September 2024, despite challenges posed by a high base effect.
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These upbeat trends across various sectors underscore India’s economic resilience and strengthen expectations of stronger GDP growth in the coming months.