Current Affairs: Passage of the Day - 17 April 2024 | Current Affairs & General Knowledge - CLAT PDF Download

Directions: Read the passage carefully and answer the questions that follow.
The Indian economy is likely to have posted a growth of 7 per cent in the second quarter of the current financial year, higher than the Reserve Bank of India’s (RBI) projections, on the back of robust investment activities, research firm ICRA said on Tuesday.
India’s investment activity was quite robust in Q2 of the current fiscal. The year-on-year growth performance of seven of the 11 investment-related indicators improved in Q2 relative to the previous quarter, ICRA said in a note.
While the year-on-year growth in the remaining four indicators weakened in Q2 relative to Q1, all of them witnessed a double-digit expansion in the quarter, including the CV registrations (+13.5 per cent), cement production (+10.2 per cent), the states’ capital outlay and net lending (+33.5 per cent), and the Government of India’s capex (+26.4 per cent), it said.
As per the latest National Statistical Office (NSO) data, India’s gross domestic product (GDP) grew at 7.8 per cent in the first quarter of the current financial year. The NSO is scheduled to release Q2 data at the end of November.
As per ICRA, the gross value added (GVA) growth is estimated to ease to 6.8 per cent in Q2 from 7.8 per cent in Q1. Services sector GVA growth is likely to decline to 8.2% in Q2 from 10.3 per cent in the previous quarter. Agriculture sector GVA growth is estimated to fall to 1 per cent in the July-September quarter from 3.5 per cent in the previous quarter. However, industry sector GVA growth is estimated to accelerate to 6.6% in Q2 from 5.5 per cent in Q1.
“A normalising base and an erratic monsoon are expected to result in a sequential moderation in the GDP growth to 7 per cent in Q2 FY2024 from 7.8 per cent in Q1 FY2024. Regardless, we anticipate that the GDP expansion in this quarter will exceed the Monetary Policy Committee’s (MPC’s) October 2023 projection of 6.5 per cent,” said Aditi Nayar, Chief Economist, ICRA.
High-frequency data suggests that the momentum of construction activity remained healthy in Q2 FY2024, with the sub-par rainfall resulting in relatively lower disruptions in the quarter vis-à-vis what was typically seen in the past. However, with a slowdown in national highway construction, the GVA growth of this sub-sector is likely to have eased to 7 per cent in Q2 from 7.9 per cent in Q1.
“Looking ahead, uneven rainfall, narrowing differentials with year-ago commodity prices, the possible slowdown in momentum of Government capex as we approach the Parliamentary Elections, weak external demand and the cumulative impact of monetary tightening are likely to translate into lower GDP growth in H2 FY2024,” Nayar said.
[Excerpt from deccanherald “Q2 economic growth likely at 7%, to beat RBI forecast: ICRA” Dated 26/11/23]
Q1: What is ICRA's predicted GDP growth for India in the July-September 2023 quarter?
(a) 6.5%
(b) 7%
(c) 7.8%
(d) 6.0%

View Answer  

Ans: (b) 7%
Sol: ICRA predicts India's GDP growth to be 7% in the July-September 2023 quarter, a sequential moderation from 7.8% in the previous quarter.

Q2: What is the projected Gross Value Added (GV(a) growth for Q2 FY2024?
(a) 6.0%
(b) 6.5%
(c) 6.6%
(d) 6.8%

View Answer  

Ans: (d) 6.8%
Sol: The GVA growth is anticipated to ease to 6.8% in Q2 FY2024, mainly due to deceleration in the services sector and agriculture.

Q3: What are the key factors impacting future GDP growth as pointed out by ICRA?
(a) Uneven rainfall and narrowing commodity price differentials
(b) Increase in government capex
(c) Strong external demand
(d) Decreased investment activity

View Answer  

Ans: (a) Uneven rainfall and narrowing commodity price differentials
Sol: ICRA notes factors like uneven rainfall, narrowing commodity price differentials, and others as potential impacts on future GDP growth.

Q4: What is ICRA's full-year GDP growth estimate for FY2024?
(a) 7.8%
(b) 6.5%
(c) 6.0%
(d) 7%

View Answer  

Ans: (c) 6.0%
Sol: ICRA maintains its full-year GDP growth estimate at 6.0% for FY2024, which is lower than the MPC’s projection of 6.5%.

Q5: Which sector is expected to see a rise in industrial GVA growth to 6.6% in Q2 FY2024?
(a) Agriculture
(b) Services
(c) Manufacturing, electricity, and mining
(d) Government capex

View Answer  

Ans: (c) Manufacturing, electricity, and mining
Sol: The industrial GVA growth is estimated to rise to 6.6% in Q2 FY2024, driven by sectors like manufacturing, electricity, and mining.

Q6: What is the projected y-o-y growth for Services GVA in Q2 FY2024?
(a) 10.3%
(b) 8.2%
(c) 6.6%
(d) 1.0%

View Answer  

Ans: (b) 8.2%
Sol: Services GVA year-over-year growth is projected to moderate to 8.2% in Q2 FY2024, down from 10.3% in Q1 FY2024.

Q7: What growth is estimated for agriculture, forestry, and fishing in Q2 FY2024?
(a) 1.0%
(b) 6.6%
(c) 8.2%
(d) 6.0%

View Answer  

Ans: (a) 1.0%
Sol: The growth in agriculture, forestry, and fishing sectors is estimated to dip sharply to 1.0% in Q2 FY2024, primarily due to a decline in Kharif crop output.

Q8: What is ICRA's outlook for H2 FY2024 GDP growth?
(a) Optimistic
(b) Cautious
(c) Negative
(d) Unchanged

View Answer  

Ans: (b) Cautious
Sol: ICRA expresses a cautious outlook for H2 FY2024 GDP growth, highlighting concerns like uneven rainfall and potential government capex slowdown.