• By Vaamanaa Sethi
  • Tue, 19 Sep 2023 01:22 PM (IST)
  • Source:JND

India’s growth forecast was revised from 5.9% to 6.6% for FY24 on the back of solid growth in the April-June quarter, S&P Global Market Intelligence announced on Monday. But projected a sharp rise in inflation to 6% in 2023, touching RBIs upper band target level, compared to 5.1% in August.

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“India’s economic growth momentum was buoyant in the April-June quarter, growing at a pace of 7.8% year-on-year, boosted by robust growth in domestic demand,” said Rajiv Biswas, APAC Chief Economist at S&P Global Market Intelligence.

S&P holds a more optimistic outlook compared to the Reserve Bank of India, which anticipates the economy to achieve a 6.5% growth in the current fiscal year. However, S&P expresses a more pessimistic view when it comes to inflation.

“There is still a risk of a severe El Nino weather event developing in late 2023 and into 2024, which could potentially result in drought conditions and push up prices for key agricultural commodities,” Biswas said.

In its assessment for FY25, S&P has revised its growth projection for the Indian economy upward to 6.2%, as opposed to the previously projected 6.1% in August. However, this positive outlook is tempered by global growth concerns that are putting pressure on overall economic expansion. 

While S&P expressed greater optimism for the global outlook in 2023 by revising growth estimates upward to 2.6%, it adjusted its 2024 forecast downward to 2.3% in its September update.

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“The 2024 global growth forecast has been lowered again. downside risks include inflation persistence, tighter financial conditions and escalating geopolitical tensions,” S&P note said.

The firm pointed out that the recession in Europe was now a base case for the second half of 2023, whereas the US is to witness a marked slowdown, with risks to China’s growth.