According to rating agency ICRA, a healthy increase in rabi (winter) crop output, a pick-up in year-over-year (YoY) growth of high-frequency indicators in January and February, strong service demand, and commodity price moderation are expected to boost India's GDP growth to 4.5-5% in the fourth quarter of fiscal 2022-23 (Q4 FY23) from 4.4% in Q3.

Crop yields may suffer as a result of the unseasonal rainfall in mid-March. ICRA forecasts that throughout FY24, consumer sentiment will improve, which speaks positively for consumption demand, but it will still remain uneven. El Nino conditions could reappear, which could have a negative impact on crop production, rural demand, and food inflation, according to ICRA.

According to ICRA, GDP growth would decrease to 6% in FY24, down from 6.9% in FY23.

In comparison to the 9.9% growth in Q3 FY23, the ICRA business activity monitor reported an 11.7% YoY increase in January-February FY23.

Although the index climbed by 15.3% from pre-COVID levels in January-February 2020, this was less than the 18.2% growth seen in Q3 FY23.

ICRA predicts two significant concerns that could stymie consumption growth. The first is a result of continuously rising inflation. Second, crop loss from a heat wave, excessive rainfall outside of season, or a monsoon drought could have an impact on farm revenues and rural spending.