India Ratings and Research (Ind-Ra) has revised upwards its GDP growth estimate for FY24 to 6.7 per cent, from 6.2 per cent earlier, on the back of the resilience of the Indian economy, sustained government capex, and sustained momentum in business and software services exports, among others.
“This (the GDP growth upward revision) has been led by a number of factors: i) the resilience of the Indian economy, which grew 7.6% yoy in 2QFY24 (higher than any forecast including the Reserve Bank of India’s (RBI)), after growing 7.8% yoy in 1QFY24, ii) sustained government capex, iii) deleveraged balance sheet of corporates/banking sector, iv) the prospect of a new private corporate capex cycle, and v) sustained momentum in business and software services exports, coupled with remittances from the rest of the world despite global headwinds,” India Ratings said in a statement.
It, however, flagged some global risks. India Ratings said there are risks to the global growth. The World Trade Organization expects the world merchandise trade volume to have grown only 0.8 per cent yoy as against the expected 1.7 per cent in 2023. However, WTO expects world merchandise trade volume to grow 3.3 per cent yoy in 2024.
Sunil Kumar Sinha, principal economist at Ind-Ra, said, “All these risks will continue to weigh on and restrict India’s GDP growth to 6.7 per cent in FY24 (FY23: 7.2 per cent). The quarterly GDP growth, which came in at 7.8 per cent yoy and 7.6 per cent yoy in 1QFY24 and 2QFY24, respectively, is slated to slow down sequentially in the remaining two quarters of FY24.”
The RBI also expects a sequential slowdown in the GDP growth in the remaining two quarters and expects the overall FY24 GDP to come in at 7 per cent.
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