- By PTI
- Wed, 31 Jul 2024 02:00 PM (IST)
- Source:PTI
India Ratings & Research (Ind-Ra) on Wednesday upped India's GDP growth forecast for the current fiscal to 7.5 percent from 7.1 percent projected earlier on the expectation of improved consumption demand. It said The ongoing growth momentum led by government capex, deleveraged balance sheets of corporates/banks, and incipient private corporate capex cycle has now found support from the union government budget.
The budget promises to bolster agricultural/rural spending, improve credit delivery to MSMEs, and incentivize employment creation in the economy.
"Ind-Ra believes these measures would help in broad basing the consumption demand," the rating agency said while revising up its GDP growth estimate for FY25 to 7.5 percent.
Ind-Ra's growth projection is higher than that of RBI which projected FY25 growth at 7.2 percent and Finance Ministry's Economic Survey which estimated GDP expansion between 6.5-7 percent. Ind-Ra expects Private Final Consumption Expenditure (PFCE) to grow to a 3-year high of 7.4 percent in FY25, from 4 percent in FY24.
The consumption demand is highly skewed, as it is driven by the goods and services largely consumed by households belonging to the upper-income bracket.
"However, an above-normal monsoon coupled with the measures announced in the union budget FY25 is expected to correct it, by boosting the demand of goods and services consumed by the rural and households belonging to the lower income bracket," Ind-Ra said.
Although food inflation continues to be a risk, the expectation of retail inflation in FY25 averaging lower than in FY24 will support the real wage growth, it added.
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