GDP Growth To Decline To 6.0% In FY2024 Amid External Slowdown; Weak Monsoon

The rating agency ICRA in a report has said that India's gross domestic product (GDP) growth is likely to decelerate to 6.0 per cent in financial year (FY) 2024 amid external slowdown and weak monsoon also posing downside risk.

The rating agency said that India’s GDP growth is expected to inch up to 4.5 to 5.0 per cent in Q4 FY2023 from 4.4 per cent in Q3 FY2023, 

This is due to the healthy rise in rabi output, uptick in YoY growth of high-frequency indicators in Jan-Feb 2023 partly led by a low base, robust services demand and a moderation in commodity prices, even as the unseasonal rainfall in mid-March 2023 could adversely impact crop yields.

ICRA expects consumer sentiments to improve through FY2024, auguring well for consumer demand, although it would remain uneven. The potential return of El Nino conditions could hurt the prospects of crop output and rural demand and put upward pressure on food inflation.

Nevertheless, the sizeable increase in the budgeted capex by the Centre and several states is expected to provide support to economic activity, amid signs of an uptick in private capex, although execution remains key. 

"With two consecutive CPI inflation prints above-6.0 per cent during Jan-Feb 2023, the Monetary Policy Committee (MPC) is likely to vote for another non-unanimous rate hike in Apr 2023, following the recent rate hike by the US Fed," it added.