S&P Global Ratings increased India's GDP growth rate prediction for 2023-24 (FY24) to 6.4 percent from 6 percent previously. However, the GDP growth forecast for FY25 has been reduced by 50 basis points (bps) to 6.4 percent.
In its report, "Economic Outlook Asia-Pacific Q1 2024: Emerging Markets Lead The Way" , the International Monetary Fund (IMF) stated, "We have revised up our projection for India's GDP growth for fiscal 2024 (ending in March 2024) to 6.4 per cent, from 6 per cent, as robust domestic momentum seems to have offset headwinds from high food inflation and weak exports."
"However, we expect growth to slow in the second half of the fiscal year due to subdued global growth, a higher base, and the lag effect of rate hikes," it added. As a result, we have reduced our fiscal 2025 growth forecast to 6.4 percent from 6.9 percent."
According to S&P Global, fixed investment in the economy has rebounded faster than private consumer expenditure. However, the agency's forecast is lower than the central bank's, which is 6.5 percent.
The agency has maintained India's GDP growth forecast for FY26 at 6.9 percent. According to S&P Global, India is likely to post inflation of 5.5 percent in FY24, which is less than the Reserve Bank of India's (RBI) upper tolerance ceiling of 6%. It is predicted to be lower in FY25, at 4.5 percent.
Retail inflation in India reached a high of 7.4 percent in July, owing primarily to high food prices. It has since calmed down. In October, it was recorded at 4.9%. In the most recent monetary policy announcement, RBI Governor Shaktikanta Das stated that retail inflation in India is expected to be 5.4 percent for FY24, with Q2 at 6.4%, Q3 at 5.6%, and Q4 at 5.2%.
"In India, there was a transitory spike in food inflation in the July-September quarter, but it appears to have had little effect on underlying inflation dynamics," S&P Global said on Monday. Nonetheless, headline inflation remains over the RBI's 4% objective, implying that the rate cycle will take some time to change."
