The performance of the Indian economy in this fiscal has turned out to be a study in contrasts.

Domestic rating agency Icra has forecast a low 6 per cent growth in the first quarter of this fiscal, but the finance ministry has remained upbeat.

India’s economic momentum remains intact in the first four months of the current fiscal despite a somewhat erratic monsoon, according to a finance ministry report released on Thursday.

The report projected a 6.5-7 per cent real GDP growth for the current fiscal year, aligning with the Economic Survey’s earlier forecast.

The official GDP data will be released on August 30.

In contrast to the government’s optimistic outlook, Icra has projected a temporary slowdown in growth for the April-June quarter.

The agency attributed this dip to a contraction in government capital expenditure and a decline in urban consumer confidence.

“Icra has projected the expansion of GDP to moderate to a six-quarter low of 6 per cent in Q1 from 7.8 per cent in Q4 of last fiscal.”

Icra chief economist Aditi Nayar said: “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, urban consumer confidence reported a surprising downtick, according to the consumer confidence survey of the Reserve Bank of India. Meanwhile, the lingering impact of last year’s unfavourable monsoon and an uneven start to the 2024 monsoon prevented a broader improvement in rural sentiment,” Nayar added.

Centre upbeat

The Monthly Economic Review of the finance ministry said the economy has sustained its momentum in April to July.

“Tax collections, manufacturing activity, and service sector performance all demonstrated robust growth,” the report said.

Goods and services tax collections have underwent a level shift pushed up by the widening of the tax base and heightened economic activity.

The resilience of domestic activity is also reflected in the strong performance of the manufacturing and services sector purchasing managers’ indices.