NEW DELHI: S&P Global Ratings on Monday revised India’s economic growth forecast for this financial year to 6.4%, up from 6% projected earlier, bringing it closer to the Reserve Bank of India’s estimate of 6.5%. “We have revised up our projection for India’s GDP (gross domestic product) growth for fiscal 2024 (ending in March 2024) to 6.4%, from 6%, as robust domestic momentum seems to have offset headwinds from high food inflation and weak exports,” said a report by the American credit rating agency.
However, it lowered its estimate for India’s growth in the next financial year by 0.5 percentage points to 6.4%, even as it said the economy is expected to bounce back to 7% growth in 2025-26 and 2026-27.
“We expect growth to slow in the second half of the fiscal year amid subdued global growth, a higher base, and the lagged impact of rate hikes. As a result, we have lowered our outlook for growth in fiscal 2025 to 6.4%, from 6.9%,” said the report.
The upward revision for this fiscal follows a similar revision by the International Monetary Fund, which revised India’s growth forecast for 2023-24 upward to 6.3% in October from 6.1% projected earlier, bringing it on a par with the projections by the World Bank (6.3%) and ADB (6.3%).
India’s economy is likely to have grown faster than expected, at 6.7%, in second quarter of this fiscal, according to a median of an ET poll of 10 economists, compared with 6.5% projected by the RBI.
The economy recorded a 7.8% growth in the first quarter of 2023-24 on the back of an increase in consumption activity and services growth.
Experts said despite slowing services growth in the second quarter, robust manufacturing and construction activity are likely to have contributed to growth in the July-September period.
The government will release GDP growth numbers for the second quarter of the fiscal on November 30.
S&P Global Ratings, however, said the headline inflation will remain higher than the RBI’s 4% target, delaying the rate cuts.
The agency forecast 5.5% inflation for this fiscal and said inflation is expected to decline to 4.5% in 2024-25. It expects inflation to average 4.7% in 2025-26 and 2026-27.
Source: The Economic Times
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