India Ratings and Research (Ind-RA), a leading credit rating agency, expects the Indian economy to grow at 6.7% in the fourth quarter (January-March 2024) and around 6.9-7% for the entire financial year 2023-24 (FY24). This forecast is slightly higher than their previous estimate of 6.2% for Q4 and aligns with the robust growth witnessed in the first three quarters.
Sunil Kumar Sinha, Principal Economist at Ind-RA, attributes the agency’s optimistic outlook to several factors. The Indian economy demonstrated resilience throughout FY24, with the June, September, and December quarters registering growth of 8.2%, 8.1%, and 8.4%, respectively. This strong performance was driven by factors like higher tax collections, indicating healthy economic activity.
However, Ind-RA acknowledges potential challenges that could moderate growth in the coming quarters. A slowdown in private final consumption expenditure is anticipated, with a projected growth of 5.2% YoY in FY24. Additionally, global factors like slowing exports and potential risks to global growth due to monetary tightening by central banks in developed economies could pose headwinds.
Despite these concerns, Ind-RA remains cautiously optimistic about India’s economic prospects. The agency cites sustained government capital expenditure as a key driver for continued growth. Investments in infrastructure development and other government initiatives are expected to stimulate economic activity. Furthermore, there’s a potential for a new private corporate capital expenditure cycle, which could further boost the economy.
The official GDP figures for Q4 and provisional estimates for FY24 are scheduled to be released by the Indian government on May 31, 2024. Ind-RA’s projections provide valuable insights for businesses and investors as they navigate the Indian economic landscape. While the overall outlook is positive, staying informed about potential risks and remaining adaptable will be crucial for success.
It’s important to note that Ind-RA’s forecast is one among many. Other rating agencies and economic experts may have different predictions based on their own methodologies and analyses. Following the official release of GDP data on May 31st will provide a clearer picture of India’s economic performance in FY24.