Representative image
According to S&P Global Ratings Senior Economist (Asia Pacific) Vishrut Rana, domestic consumption will support the Indian economy’s average growth rate of 6.7% through the 2026–27 fiscal year. According to him, the current fiscal’s economic growth is forecast to be about 6%, which is less than the 7.2% recorded in 2022–2023.
“We are seeing some headwinds from the trade side which is affecting activity and that is one of the factors that is affecting growth this year,” Rana said at a webinar.
Weaker external conditions, reduction in pent-up demand, and weakening private consumption activities are the drivers for the deceleration from the 7.2% growth previous fiscal year, according to Rana. He also noted that tighter monetary policy is anticipated to have some impact on consumer demand.
“We expect 6.7 per cent growth on average over the course of our forecast horizon which extends to FY26-27. This fiscal (2023-24) we expect growth to be 6 per cent,” Rana said, adding that consumer activity would be the lead driver of growth.
The Reserve Bank of India expects GDP to rise by 6.5% this fiscal year.
Rana added that the investment picture is looking much better and that there is a “strong tailwind” coming from that direction.
The rate of inflation is reducing… We do not anticipate the RBI to act quickly to lower interest rates,” Rana said, adding that the bank is likely to hold off until the beginning of 2024 before doing so until inflation expectations have been properly stabilised.
Retail inflation dropped to 4.25 percent in May, which is a more than 2-year low. The RBI is required to maintain inflation at 4% with a +/- 2% tolerance margin.
S&P predicted earlier this week that India’s economy will grow at a rate of 6%, making it the fastest-growing in the Asia Pacific region.
(This story has not been edited by Bharat Express staff and is auto-generated from a syndicated feed.)
