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India’s average growth rate is anticipated to be 6.7% through FY27, with consumer spending as the main driver: S&P

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 during a webcast.

Weaker external conditions, reduction in pent-up demand, and weakening private consumption activities are the drivers for the deceleration from the 7.2% increase previous fiscal year, according to Rana. He also said that tighter monetary policy is anticipated to have some influence on consumer demand.

“Over the duration of our projection horizon, which covers the years FY26 and FY27, we anticipate growth of 6.7% on average. We anticipate growth to reach 6% this fiscal (2023–24),” Rana said, adding that consumer spending will be the main engine of development.

The Reserve Bank of India expects GDP to rise by 6.5% this fiscal year.

Rana said 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 GDP would expand at a rate of 6%, making it the fastest-growing in the Asia Pacific region.

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