S&P raises India's FY'24 growth prediction to 6.4 pc due to strong domestic momentum
New Delhi, November 27: S&P Global Ratings has revised India's growth forecast for the current financial year to 6.4 per cent, up from 6 per cent, citing robust domestic momentum counterbalancing challenges like high food inflation and sluggish exports.
Despite the upward revision for the ongoing fiscal year, the US-based rating agency has trimmed growth projections for the next fiscal (2024-25) to 6.4 per cent. This adjustment is attributed to anticipated deceleration in the second half (October-March) of the current fiscal year, influenced by higher base effects and a globally subdued growth outlook. "We've adjusted our forecast for India's GDP growth for fiscal 2024 (ending in March 2024) to 6.4 per cent from 6 per cent, as strong domestic momentum appears to have mitigated challenges posed by elevated food inflation and weak export performance," S&P stated.
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However, concerns arise about a probable slowdown in the latter half of the fiscal year due to subdued global growth, a higher base, and the delayed effects of interest rate hikes. Consequently, the growth outlook for fiscal 2025 has been revised downward to 6.4 per cent from the previously projected 6.9 per cent, as per S&P's assessment.
India's economy had witnessed a 7.2 per cent growth in the 2022-23 fiscal year ending in March 2023, while the GDP recorded a 7.8 per cent expansion in the April-June quarter. In its Economic Outlook for Asia Pacific, S&P highlighted that emerging market economies with robust domestic demand like India, Indonesia, Malaysia, and the Philippines are expected to sustain the strongest growth rates this year and the next.
The report emphasised that fixed investment has notably recovered more than private consumer spending in India. Though there was a transient surge in food inflation from July to September, its impact on the underlying inflation dynamics seems limited. However, despite this, headline inflation remains above the Reserve Bank of India's 4 per cent target. S&P suggests that this could potentially delay any shift in the rate cycle, indicating a longer wait before significant changes in monetary policies are enacted.
- With inputs from agencies
