India's Economy Poised for Robust Q2 Growth Amid Festive Demand

India's economy is set to grow by 6.9% in Q2, driven by festive demand, positive economic indicators, and increased consumer confidence. The latest report from Bank of Baroda highlights robust activity in the services sector and recovery across various sectors, despite ongoing inflationary pressures.

India's economic growth is projected to reach 6.9% in the second quarter of the fiscal year, as reported by Bank of Baroda. This marks a notable increase from the 6.7% growth in the first quarter, driven by strong domestic demand and rising high-frequency economic indicators.

Boosted by the festive season, which kicked off in September and extended through October, demand across multiple sectors has surged. Significant improvements in air passenger traffic volumes and a rise in the Services Purchasing Managers' Index signal solid activity in the services sector.

Additional metrics, such as enhanced toll collections, increased vehicle registrations, and a rise in non-oil and non-gold imports, reflect a boost in mobility and consumer engagement. Furthermore, government expenditure from both central and state bodies has catalyzed this economic momentum.

The report also points to a revival in digital payments, a surge in auto sales, and balanced growth across manufacturing and services sectors. September's consumer confidence report by the Reserve Bank of India showed stable household sentiments, with rural demand witnessing considerable growth in two-wheeler and tractor sales.

However, persistent inflationary pressures loom, as revealed in October's price data. Consequently, the RBI is expected to hold steady on interest rates during its December policy meeting, though a potential rate cut might be considered by February 2025. A moderate deceleration in credit growth might affect economic momentum in the future quarters.

Overall, with festive demand, solid consumer confidence, and positive rural and urban indicators, India's economy is on a path to steady growth. The Indian GDP data for the second quarter of 2024 is scheduled for release on November 29 by the Ministry of Statistics and Programme Implementation.

(With inputs from agencies.)