The RBI’s Survey of Professional Forecasters (SPF) is aligning with the positive trend, upgrading India’s real GDP growth from 6.4 per to 7.0 per cent.
India is poised to remain the fastest-growing major economy in the world in FY24, according to a poll of economists conducted by news agency Reuters. The economists polled by the news agency also suggested that inflation may not surge again.
It may be noted that the Indian economy has performed better than expected in the first two quarters of the ongoing financial year, backed by strong spending by the government as it prepares for the all-important Lok Sabha polls later this year.
While infrastructure continues to be a key area of focus for the government heading into the Interim Budget 2024 on February 1, some issues in the background have dented the country’s growth potential, including private capex and job creation.
A total of 54 economists polled by the news agency suggested that the Indian economy will grow 6.9 per cent in FY24, marking a small but important upgrade from 6.7 per cent in the previous December poll. In FY25, the economy is expected to grow 6.3 per cent.
While India’s GDP growth has remained strong over the past few quarters, high levels of inflation have been a constant worry for most parts of FY24. It may be noted that retail inflation rose to 5.69 per cent in December, the highest in four months.
However, economists expect inflation to fall in the short term. Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said, “We expect inflation to subside quite drastically in the short run, catching up to the downside with already-subdued core inflation.”
“At the same time, though, these trends also reflect an enduring sluggishness taking hold in the economy, particularly with regards to private consumption, the most important aspect of growth,” added Chanco.
The survey indicated that consumer price inflation is expected to average 5.4 per cent and 4.7 per cent in the current fiscal year and the following one, with the majority of economists (23 out of 32) expressing the view that the risk of a significant resurgence in the next six months is low.
Despite consumer spending constituting 60 per cent of Asia’s third-largest economy, it has experienced a slowdown.
However, a substantial majority of economists (25 out of 28) believe that employment prospects will improve in the next six months.