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India’s GDP Likely To Grow At 6.1% In FY24: Standard Chartered Bank
Supportive government policies, a sustained revival in services and a pick-up in private capex are tailwinds for growth, according to the report
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Standard Chartered Bank in its India market outlook report has said that India’s gross domestic product (GDP) is expected to grow at 6.1 per cent and the consumer price index (CPI) is expected to average 5 per cent in the financial year 2024.
Economic activity remained strong in H1 2023. India’s GDP grew 7.2 per cent in FY23. YTD 2023, Industrial production growth has averaged 4.4 per cent (vs 7.4 per cent/4.7 per cent in H1 2022/CY 2022, while manufacturing PMI has averaged 56.8 (vs 54.3/55.2 in H1 2022/CY 2022).
India’s consumer price inflation eased to an average of 5.5 per cent in 2023 YTD (until May 2023) compared to 6.7 per cent in the calendar year (CY) 2022. Moderating core inflation, lower food and commodity prices are primary drivers of lower inflation, the report mentioned.
The bank in the report stated, "We expect India’s economic growth to track above its long-term trend and stay ahead of its major peers in 2023. Supportive government policies, a sustained revival in services and a pick-up in private capex are tailwinds for growth."
Further, a likely peak in the Reserve Bank of India (RBI’s) policy rate could drive a pick-up in consumption demand.
"In our view, CPI inflation is likely to trend lower in 2023, to track within the RBI’s medium-term target range of two to six per cent given the high base effect, easing commodity prices and the lagged impact of monetary policy tightening," the report added.
It also said that fiscal policy remains the key driver for growth in 2023, with financial conditions still tighter than normal.
The measures undertaken by the government including greater public capex spend, long-standing reforms related to taxation and labour and providing incentives to boost manufacturing and infrastructure are likely to boost India’s medium-term growth outlook.
"In our view, the RBI’s decision to keep policy rates unchanged in its last policy meeting and subsequent lower inflation prints likely signals an end to the tightening cycle," according to the report.
Meanwhile, key risks to macro-outlook are global growth slowdown, persistently high inflation and escalating geo-political tensions.