The financial advisory firm also maintains its full-year
Utilities GVA is expected to rise by 11.5 per cent, while the construction sector has slowed due to election-related disruptions and the impact of heat. The mining sector remains strong, supported by increased coal production.
The services sector is expected to be the primary driver of GDP growth in Q1 FY25. Despite reduced
This performance is attributed to strong market activity and credit growth. However, the trade and transport sectors present a mixed picture, with some indicators showing improvement while others remain moderate. Overall, Services Gross Value Added (GVA) is expected to grow by 8.2 per cent in Q1 FY25.
As per the report, Investment was a key growth driver in FY24, fuelled by government infrastructure projects and a real estate upswing. However, the momentum appears to have slowed in Q1 FY25 due to pre-election restrictions. Despite this, the report predicts a significant rise in government capital expenditure in the coming months, supported by greater budget allocations.
The report highlights the changing dynamics of private consumption in India. FY24 saw weak consumption, especially in rural areas, with final consumption expenditure growing by just 3.8 per cent.
However, as FY25 begins, there are signs of a rural revival. Indicators such as increased two-wheeler sales and improving Fast-Moving Consumer Goods (FMCG) volume growth signal a rebound in rural demand.
In contrast, urban demand continues to show signs of sluggishness. The muted sales of passenger vehicles, weaker retail credit transfers, and flat Goods and Services Tax (GST) collections underscore this trend.
While consumption is not expected to see a significant rise in Q1 FY25, the outlook for the remainder of the year appears positive. This optimism is bolstered by anticipated higher agricultural output and sharper government focus on rural areas.
The agriculture sector is expected to post a subdued growth of 2.1 per cent in Q1 FY25, affected by scorching heat and uneven rainfall last year, which led to lower reservoir levels and hindered farming activities. However, the outlook is more promising for the remainder of the fiscal year, with better rains and improved sowing conditions expected to boost agricultural output
Additionally, a rebound in stamp duty collections suggests buoyant real estate sales. Private capital expenditure, which was previously subdued, is expected to expand in FY25, driven by rising capacity utilisation and strong order books.
The industrial sector, which grew by 9.5 per cent in FY24, is expected to see a shift in growth drivers in Q1 FY25. The focus is now moving towards utilities and mining, with manufacturing growth slowing.
While government infrastructure projects and private capital expenditure will continue to support industrial growth, the global growth slowdown poses potential risks.