US-based S&P Global Ratings on Monday retained India’s growth forecast for 2023-24 at 6 per cent on the back of good growth in the April-June quarter.
However, this is lower than all the recent revised forecasts and RBI’s estimate of 6.5 per cent. The agency has upped its inflation forecast for India by 50 basis points.
“Growth this year will be weaker than in 2022, but our outlook remains broadly favourable. Notwithstanding the strong expansion in India in the June quarter, we maintain our forecast for fiscal 2024 (ending March 2024), given the slowing world economy, the delayed effect of rate hikes and the rising risk of subnormal monsoons,” S&P said in its Economic Outlook for Asia Pacific Q4 2023 report.
Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings, said the increases in global oil and food prices, combined with jumps in vegetable prices, raised consumer inflation by a large margin.
It was 6.8 per cent in August, above the Reserve Bank of India’s upper tolerance limit of 6 per cent.
“While we see the vegetable price inflation as being temporary, we have revised up our full fiscal year consumer inflation forecast for India to 5.5 per cent from 5 per cent earlier,” he said.
Indian economy grew 7.2 per cent in 2022-23 fiscal year which ended March 2023.
While retaining its growth forecast for the current fiscal at 6 per cent, S&P also maintained that India’s economy will grow 6.9 per cent in both 2024-25 and 2025-26 fiscal years.
Fitch Ratings had raised its growth forecast to 6.3 per cent.