Indian economy is likely to grow by 6.7% in FY24
India's economy is predicted to grow by 6.7% in FY24, according to a median forecast of 11 economists, as reported by the Economic Times. This growth is fueled by domestic demand and increased investments. However, the median is still short of the recent Reserve Bank of India (RBI) estimate of 7%. Rahul Bajoria, managing director and head of EM Asia at Barclays, said, "India's growth has remained largely resilient in the face of external headwinds."
Manufacturing sector and investment growth
The manufacturing sector saw a nine-quarter high growth of 13.9% in July-September, while investments, represented by gross fixed capital formation, grew by 11% compared to last year. The investment rate reached 30% of GDP in nominal terms, the highest for Q2 since FY15. Rajani Sinha, Chief Economist at CareEdge, explained, "We have revised our GDP growth projection upwards by 50 bps to 6.8% for FY24 owing to the positive surprise on the investment front in second quarter GDP numbers."
Momentum expected to continue into FY25
Economists believe that India's economy will continue to grow into FY25, with median forecasts suggesting a 6.3% increase. Some even expect over 6.5% GDP growth. Anjali Verma, chief economist at PhillipCapital India, said, "We have been quite positive on India for the last 1.5 years." "Despite elevated interest rates, most of the macro factors have remained resilient. We expect momentum to remain fairly buoyant in the coming years." Verma predicts over 7% growth in FY25.
Inflation and monetary policy outlook
Inflation is also expected to improve, with median estimates dropping to 4.7% in FY25 from the current projection of 5.4%. The RBI is likely to start easing monetary policy from Q2 of FY25. Gaura Sengupta, economist at IDFC First Bank, noted, "In FY24, listed company profits were supported by a decline in input cost pressures, which countered the slowdown in sales growth. In FY25, incremental support from lower input costs would be limited."
