Due to the Lok Sabha elections in 2024, GDP growth would marginally fall

Due to the impending Lok Sabha elections, Goldman Sachs projected that India’s real GDP growth will slightly slow down to 6.3% in 2024 from the 6.4% predicted for 2023.

The US brokerage business said that the forthcoming year would be divided into two parts, with government expenditure anticipated to be the main engine of development before to the 2018 General Elections and a resumption of investment growth, particularly from the private sector, after the elections.

It anticipates that growth would quicken to 6.5% for FY25, up from its forecast of 6.2 % for the current FY24.

“In the area, India has the strongest chances for structural development. According to the firm, GDP growth in 2024 is anticipated to remain strong at 6.3 percent year over year.

It also said that the nation is less vulnerable to possible outside shocks like extended global interest rates, ongoing dollar strength, and geopolitical unpredictability.

The risks associated with the economic prognosis are well distributed, although political unpredictability is the primary domestic risk, since elections are scheduled for the April–June quarter of 2024.

Five states have already had Assembly votes this election season; the General Elections will take place later.

Investors will be closely monitoring the results of these elections in light of potential economic improvements and/or policy continuity, the research said.

In 2024, headline consumer price inflation is predicted by the Reserve Bank of India to be 5.1%, up from their previous projection of 4.7%.

It did, however, note that this would be less than the 5.7 percent predicted for 2023.

It said, “In an election year, we expect the government to intervene through subsidies or other measures to keep a lid on food prices.”

The company predicted that the RBI would only reduce rates by 0.50 to 6 percent by early 2025 due to the slightly higher inflation than the objective, which will restrict the space for monetary easing.

“Q4 2024 and Q1 2025 will see a cut of 0.25 percent each.”

S&P Global Ratings has said that the medium-term growth prospects should continue to be favorable, with the GDP growing by 6-7.1 percent each year in the fiscal years 2024–2026.

It is noteworthy to mention that India’s real GDP increased by 7.8 percent year over year in the June quarter, compared to 6.1 percent in the March quarter. The Reserve Bank of India, the nation’s central bank, projects 6.5 percent GDP growth in the 2023–24 and 2024–25 fiscal years.

Citing solid internal fundamentals, Morgan Stanley Research has predicted that India’s GDP will rise by around 6.5 percent in FY2024 and FY2025.

Additionally, Moody’s Investor Services maintained that India’s GDP will increase by 6.7 percent in 2023, noting the nation’s amazing ability to withstand a global recession supported by strong domestic demand.