The agency believes that the YoY growth is expected to slow from Q1 FY2023 to Q2 FY2023 and further to H2 FY2023, this would largely be optical in nature
ICRA has maintained that India’s GDP will rise by 7.2 per cent in FY2023. The credit rating agency says that this growth will be augmented by a revival in contact-intensive services owing to pent-up demand, and a back-ended pick-up in Government and private capex. The agency believes that the YoY growth is expected to slow from Q1 FY2023 to Q2 FY2023 and further to H2 FY2023, this would largely be optical in nature.
But on the longer run, ICRA says growth will pick up compared to pre-Covid levels of FY2020. “The record generation of average daily GST e-way bills in August 2022, owing to pre-festive stocking, indicates a revival in confidence and this coupled with softening commodity prices bodes well for the upcoming festive season”, said ICRA in a statement.
ICRA believes that these trends, along with robust imports and improved compliance portend that the GST collections are expected to remain healthy in September 2022, in the range of Rs. 1.4-1.5 trillion. Additionally, there has been a sizeable drop in commodity prices, amidst fears of a global recession. This is likely to ease margin pressure for businesses in Q2-Q3 FY2023 and augur well for the YoY growth in GDP in these quarters.
Although the decline in output of key kharif crops such as rice and flagging external demand pose risks to growth and remain the key monitorables, according to ICRA. But the latter is expected to lead to sharp widening in the CAD to about 3.5 per cent of GDP in FY2023. “We expect the MPC to hike rates by 50 bps in end-Sep 2022 and turn data- dependent thereafter, taking a cue from the latest CPI prints and the strength of the Q2 FY2023 GDP growth”, ICRA said.
The ICRA Business Activity Monitor rebounded to 114.1 in August 2022, after having declined to the five-month low of 113.5 in July 2022. In YoY terms, the growth in the index rose to 11.4 per cent in August 2022 (+16.2 per cent in August 2021) from 10.9 per cent in the previous month (+18.2 per cent in July 2021), with an improvement in the performance of nine of the 16 high frequency indicators, including the generation of GST e-way bills, production of motorcycle and PVs, vehicle registrations, consumption of finished steel, petrol and diesel.