A Finance Ministry report terms a 6.5 per cent GDP growth estimate for FY24 with symmetric risks as ‘comfortable’.
This remark has come at a time when many agencies have revised the growth estimate. S&P Global Market Intelligence has revised India’s growth forecast for FY24 to 6.6 per cent due to strong growth in the April-June quarter, up from the 5.9 per cent projected in August. The Organization for Economic Cooperation and Development (OECD) has raised India’s GDP forecast for 2023-24 to 6.3 per cent from 6 per cent projected earlier. Earlier, Fitch Ratings raised its growth forecast to 6.3 per cent for the current fiscal year from 6 per cent. However, ADB lowered the growth to 6.3 per cent from 6.4 per cent.
Risks on the horizon
Indian economy grew by 7.2 per cent in FY23.
In its monthly economic review, the Economic Affairs Department said that the risks of a stock market correction and geopolitical developments could potentially hurt investment sentiment in the second half of the financial year. But “the impact of these developments on underlying economic activity in India should be relatively contained,” the report added.
Further, it said that India’s economic outlook for FY24 remains bright. Economic activity maintained its momentum. HFIs suggest that the second quarter of FY24 is shaping up well too. The monsoon deficit of August has been partially plugged in September, which is good news. Prices of selected food items that drove the inflation rate above 7 per cent in July are on the retreat. “Private sector is in good health as data on advance tax payments for second quarter confirm. They are investing,” it said.
Concerns over oil prices
It admitted that the recent run-up in oil prices is an emerging concern. But, no alarms yet, it claimed. The US 10-year bond yield has crossed 4.3 per cent, and the S&P 500 index is not too far from its all-time high. The risks of a stock market correction and geopolitical developments could potentially hurt investment sentiment in the second half of the financial year. But, “the impact of these developments on underlying economic activity in India should be relatively contained. Therefore, in sum, the baseline estimate for India’s economic growth in FY24 is 6.5 per cent, at 2011-12 prices,” the report said.