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India's GDP forecast to grow 6% in FY24 amid external headwinds: ICRA

21 Jun '23

1 min read

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Insights

ICRA has forecast India's gross domestic product (GDP) growth at 6 per cent and CPI inflation at 5.1 per cent for FY2024.
A boost in consumer confidence and overall recovery in investment activity are expected to drive growth, amid external headwinds and potential climate risks, as per ICRA.
The country's monetary policy is likely to remain steady.

India's gross domestic product (GDP) is expected to grow 6 per cent in financial year 2024 (FY24), according to projections by ICRA, an independent credit rating agency. The agency has projected CPI inflation at 5.1 per cent, asserting that the risks are evenly balanced.

Domestic economic activity is expected to gain substantial momentum in FY2024. The main drivers are set to be the sustained improvement in urban consumer confidence and an overall recovery in investment activity. However, the demand for goods may remain uneven due to fluctuating inflationary pressures, as per ICRA.

The Indian government and states' commitment to increased budgeted capex targets offers further encouragement, although the timely implementation will be critical to support economic activity amid external headwinds. These challenges are reflected in the ongoing contraction in merchandise exports. In addition to these factors, potential environmental risks could add to the country's economic strain.

In terms of monetary policy, ICRA predicts a stable path throughout FY2024 unless there is a substantial increase in CPI inflation during Q2-Q4, diverging from the Monetary Policy Committee’s (MPC) projections. Consequently, the agency expects an extended pause, with the policy stance likely to remain unchanged over the next two policy reviews.

Fibre2Fashion News Desk (DP)

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