Growth in the Gross Value Added (GVA) in the Indian economy is expected to record ‘an intermittent dip’ in the second quarter (Q2) of 2024-25, despite economic activity levels improving in September from a 16-month low in August, rating agency ICRA indicated on Monday.

India’s GDP had risen 6.7% in the April to June 2024 quarter, while the GVA was up 6.8%. The Reserve Bank of India had projected a 7.2% growth in GDP through this financial year, but recently lowered its Q2 growth estimate to 7% from 7.2%, while retaining the full-year forecast.

“The year-on-year (YoY) growth in economic activity, as measured by the ICRA Business Activity Monitor - an Index of high frequency indicators - improved to 7.2% in September 2024 from 16-month low 6.1% in August 2024, partly aided by a favourable base,” ICRA said. In quarterly terms, growth in the Index moderated to 7.9% in Q2 from 10.1% in Q1, with the agency attributing this to the impact of excess rainfall on mining activity, electricity generation and retail footfalls.

After cooling in Q2, the rating agency expects the growth momentum to pick up in the second half of the year with GVA growth expected to rebound to more than 7%, riding on an improvement in rural demand following favourable monsoon and kharif sowing trends, and an acceleration in government capex growth.