ICRA, a domestic rating agency, stated on Wednesday that heavy rains and poorer corporate performance will likely cause India’s real GDP growth for the September quarter to drop to 6.5%.

At a time when there are worries about the growth slowdown due to a number of issues, including falling urban demand, the estimates and commentary on the outlook are released.

Although most observers anticipate growth to be below 7%, the RBI is sticking to its projection of 7.2% for the fiscal year, and many have been lowering it in recent weeks.

On 30 November, official statistics for the second quarter’s economic activity are anticipated to be released. In the first quarter, the GDP grew by 6.7%.

According to ICRA, the decline in Q2 will be caused by elements like lower corporate margins and severe rainfall.

“While government spending and kharif sowing have shown positive trends, the industrial sector, particularly mining and electricity, is expected to slow down,” it said.

It also stated that a back-ended recovery and an improvement in the services sector are expected to result in a 7% GDP increase for the entire year.

“Q2 FY2025 saw tailwinds in terms of a pick-up in capex after the Parliamentary Elections as well as healthy expansion in sowing of major kharif crops. Several sectors faced headwinds on account of heavy rainfall, which affected mining activity, electricity demand and retail footfalls, and a contraction in merchandise exports,” its chief economist Aditi Nayar said.

According to her, the positive kharif output and refilled reservoirs will likely result in a long-lasting improvement in rural sentiment, and the advantages of the excellent monsoons will continue to accrue.

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