India’s GDP growth is anticipated to fall to 6.3% in FY24

According to the World Bank‘s most recent report released on Tuesday, India’s GDP growth is anticipated to remain steady despite some moderating in the second half of the previous fiscal year.

The India Development Update study noted that the growth rate is anticipated to fall to 6.3% in FY24 as a result of decreased consumption brought on by slower income. The report also predicted that India’s current account deficit (CAD) will be at 5.2% in FY24 and that retail inflation will moderate from 6.6% to 5.2% in FY 2023–24.

Everything about India’s GDP Growth!

“For the fiscal year 2023-2024, the World Bank lowered its GDP prediction from 6.6% to 6.3%. Slower consumer growth and difficult external conditions are anticipated to limit growth. Private consumption growth will be hampered by higher borrowing costs and slower income growth, and government spending will rise more slowly when pandemic-related fiscal support measures are removed, the report added.

The construction and manufacturing industries, which lost several employment due to the Covid epidemic, have impacted the growth rate, according to the World Bank, which highlighted the areas of worry. Nonetheless, it emphasized that after the pandemic, labor market results have improved. The Indian economy’s year-over-year growth decreased to 4.4% in the October-December quarter from 11.2% a year earlier and 6.3% the quarter before. India’s services exports, which peaked in the October-December quarter, are projected to boost the economy despite global challenges, according to the research.

This week, RBI data showed that India’s services exports climbed 24.5 percent y-o-y to $83.4 billion in October-December 2022. The non-imports services surplus rose 39.21% to $38.7 billion. A decline in merchandise trade imbalance reduced the current account deficit to $18.2 billion, or 2.2 percent of GDP. The CAD is anticipated to be approximately 5.2% in FY24, according to the most recent World Bank estimate. Recently, the rating company S&P Global Ratings retained its projection for India’s economic growth at 6% without making any changes.

The World Bank research observed that although inflation is high, overall pressures are easing as food and fuel costs stabilize. Although the inflation rate is beyond the upper limit of the Central Bank of India’s target range of 2–6%, it was acknowledged in the report. The RBI’s Monetary Policy Committee has raised the repo rate by 250 basis points since May 2022, it noted.

To lower retail inflation and keep up with global counterparts, the RBI is expected to raise the benchmark interest rate by 25 basis points in its bi-monthly monetary policy on April 6. The US Federal Reserve, European Central Bank, and Bank of England raised interest rates last month to control inflation. Before setting the repo rate, the Central Bank’s Monetary Policy Committee will convene on April 3, 5, and 6 to consider domestic and global issues.