The economy is showing signs of a modest recovery after reporting muted growth of 6.7 per cent in the first quarter, economists said

While increased government spending and improved monsoon conditions are expected to boost growth, high-frequency indicators suggest a slower-than-anticipated rebound, a report by Anand Rathi said.

The monsoon narrative has played a significant role in the divergence of trends.

While favourable rainfall has supported rural demand, late withdrawal and floods in certain regions have impacted consumption-led sectors such as out-of-home consumption and agro-chemicals.

Additionally, infrastructure and cement sectors have faced execution delays due to elections, erratic monsoons and slower disbursement of budgetary allocations.

Despite these challenges, sectors such as hospitals, two-wheelers, jewellery and large-ticket consumer durables are expected to outperform.

However, global cyclicals such as metals and oil & gas are likely to continue underperforming.

Suman Chowdhury, chief economist and executive director, Acuité Ratings & Research, said: “ Weaker IIP data is likely to have an impact on the GDP growth for Q2FY25 with increased downside risks on the 7 per cent forecast by RBI.”

Reserve Bank of India governor Shaktikanta Das has estimated real GDP for 2024-25 to be 7.2 per cent.

He projected real GDP for Q2 at 7 per cent.