Domestic rating agency ICRA has projected India’s Gross domestic product (GDP) growth to moderate to a six-quarter low of 6 per cent in April-June (Q1FY25) from 7.8 per cent in Q4 FY2024 on account of contraction in government capital expenditure and a dip in urban consumer demand. For the full fiscal 2024-25, ICRA expects GDP to grow 6.8 per cent, lower than the 8.2 per cent clocked in 2023-24.

According to the report, the June quarter of the current fiscal saw a temporary lull in some sectors due to the Parliamentary elections and sluggish government capex at both the central and state levels. Further, it said urban consumer confidence reported a surprising downtick, as per the Consumer Confidence Survey of the Reserve Bank of India. Meanwhile, it said the lingering impact of last year's unfavourable monsoon and an uneven start to the 2024 monsoon prevented a broader improvement in rural sentiment.

The report said lower volume growth combined with diminishing gains from commodity prices weighed upon the profitability of some of the industrial sectors. The heat wave also affected footfalls in various service sectors, even as it provided a significant boost to electricity demand. On balance, ICRA foresees a transient moderation in India's Gross value added (GVA) and GDP growth in Q1 FY25 to 5.7 per cent and 6 per cent, respectively.