The economy is expected to grow by 12-13% in Q1, an annual GDP estimate of 7.2, says Icra.

Rating agency Icra expects the economy to grow by 12-13 percent in the first quarter of the current fiscal year. The credit rating agency cited the second-highest trading activity index reading in 13 months in April as a trigger for this.

On the other hand, it has kept its annual GDP estimate at 7.2 percent for the current fiscal year, citing concerns over inflation and consequent tightening of the RBI, a PTI report said.

Aditi Nair, chief economist at ICRA, told PTI: “Our Business Activity Monitor 115.7 for April indicates that activity was about 16 per cent higher than a year ago (period) and had pre-COVID levels despite global headwinds.”

According to PTI, this high growth is expected to continue in May, especially on an annual basis, double-digit GDP gains of 12-13 percent in the first quarter. This, however, may not be sustainable and may reduce annual volume and activity growth, he warned.

He predicted that the consumer price index would average 6.3-6.5 percent this fiscal year, citing rising inflation concerns.

The main threats to inflation and growth are rising fuel prices and the impact of the Ukraine conflict. He predicted that if the war did not subside soon, the outcome would be much higher than expected, PTI said.

This is also the main reason for keeping the full-year GDP growth forecast at 7.2 percent, a higher figure with a lower base effect.

In terms of interest rates, Nair said the central bank is expected to raise rates by 25 basis points in each of its policy reviews in June and August, depending on the course of the war in September and the impact on commodity prices, PTI reported.

In a report, earlier in the day, the company said its Business Activity Monitor hit 115.7 in April, the second-highest in 13 months, at 16.1 percent, with a low base exaggerated growth.

In March, the index was 123.7, up from 107.8 in February, PTI reported.

The monitor is an index of high-frequency economic indicators that measures economic activity per month and consists of 14 high-frequency indicators related to industry and services sectors.

The 14 monthly high-frequency indicators used to make monitors include auto production, coal India output, power generation, export of non-oil commodities, rail freight traffic, port cargo traffic and vehicle registrations.