The gross domestic product (GDP) growth rate prediction for India for the Financial Year 2024 has been raised by S&P Global Ratings from 6% to 6.4%. However, the GDP growth estimate for the next fiscal year, FY25, has been cut by 50 basis points.
Strong domestic momentum has reportedly countered negative effects from rising food prices and sluggish exports.
Nevertheless, because of the delayed effects of rate increases, a larger base, and muted global economy, we still anticipate a slowdown in growth in the second half of the fiscal year. As a consequence, we have revised down our forecast for fiscal 2025 growth from 6.9% to 6.4%, according to S&P.The agency’s estimate, however, is less than the central bank’s 6.5%.
More fixed investment than private consumer spending has returned in the nation. The agency has maintained the 6.9% GDP growth estimate for India for FY26.
According to S&P Global’s analysis of inflation, India is predicted to register 5.5% inflation in FY24, which is below the RBI’s 6% upper tolerance range, and 4.5% inflation in FY25.
“Food inflation in India experienced a brief surge during the July-September quarter, but it doesn’t seem to have had much of an impact on the underlying dynamics of inflation.” It also said that “headline inflation is still above the RBI’s target of 4%, indicating that it will take some time before the rate cycle turns.”
In its monthly economic report for October, the Ministry of Finance recently said that inflationary concerns are still there and are putting the RBI and the Center on high alert.
The Finance Ministry said that there may be a resurgence of recessionary risks in 2024 due to ongoing geopolitical tensions and uncertainty around rising food and energy costs.
According to the research, inflationary pressures are anticipated to be contained by the recent drop in the price of crude oil internationally and the ongoing reduction of core inflation.
Ahead of the Lok Sabha elections, Goldman Sachs warned that India’s real GDP growth will only slightly slow down to 6.3% in 2024 from the 6.4% predicted for 2023.
In 2024, the headline consumer price inflation rate is expected to be 5.1%, compared to the Reserve Bank of India’s prediction of 4.7%.