Within a recent comprehensive mid-year macroeconomic review, the National Institute of Public Finance and Policy (NIPFP) has unveiled its prognosis of a forthcoming deceleration in India’s economic momentum. Projections indicate that the nation’s growth rate is likely to taper down to 6% during the financial year 2023-24 (FY24), representing a dip from the 7.2% registered in the preceding FY23. This envisaged deceleration is principally attributed to the prevailing crosswinds within the global economic arena. NIPFP’s meticulous scrutiny encompasses a wide spectrum of economic indicators and trends, bequeathing a trove of insights that illuminate the potential trajectory of India’s economic odyssey.
Of note in the assessment is the robust exhibition of the industrial domain during the initial quarter (Q1), with the construction and consumer non-durables sectors taking the spotlight. Nonetheless, the agricultural sector’s expansion remained subdued, and a lethargic pace characterized growth within the services sector during the same timeframe.
The review underscores an anticipation of retail inflation to sustain itself below the threshold of 6%, settling at 5.1% for the ongoing fiscal year. This moderated inflation projection is ascribed to the lagged effects of monetary policy transmission and an all-encompassing decline across food, energy, and core inflation categories. The projected inflation trajectory assumes prominence as it shapes both monetary policy deliberations and consumer sentiments.
The Reserve Bank of India (RBI) maintains its real GDP projection for FY24 steadfast at 6.5%, grounding this anticipation on the envisagement of heightened urban and rural expansion, augmented investment activities, and the government’s steadfast commitment to elevated capital expenditure. However, the central bank revisits its inflation outlook, foreseeing an inflation rate of 5.4% for FY24. A quarterly dissection of the inflation landscape presages figures of 6.2% for Q2, 5.7% for Q3, and 5.2% for Q4, correspondingly. The RBI’s standpoint unveils distinctive insights into India’s economic prospects from the vantage point of monetary policy considerations.
The NIPFP’s delineation of a 6% growth prognosis for FY24 finds its moorings in the broader tapestry of global economic circumstances. External variables including shifts in global trade dynamics, vacillations in commodity prices, and the persistent ambiguities tied to pandemic recuperation collectively interweave to mold India’s economic performance on the world stage.