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India's GDP to grow at 6% in FY24: CRISIL

IANS | March 16, 2023 01:51 PM

CHENNAI: Terming the global environment as gloomier, credit rating agency CRISIL Ltd on Thursday forecast India's gross domestic product (GDP) growth at 6 per cent for FY24 down from 7 per cent estimated by the National Statistical Organisation (NSO) for FY23.

"A complex interplay of geo-political events, stubbornly high inflation, and sharp rate hikes to counter that, have turned the global environment gloomier, " CRISIL said.

On the domestic front, the peak impact of the rate hikes -- 250 basis points since May 2022, which has pushed interest rates above pre-Covid-19 levels -- will play out in fiscal 2024, the credit rating agency said.

According to CRISIL, consumer inflation is expected to moderate to 5 per cent on average in fiscal 2024 from 6.8 per cent in fiscal 2023, owing to high-base effect and some softening of crude and commodity prices.

A good rabi harvest would help cool food inflation, while the slowing economy should moderate core inflation.

The risks to inflation are tilted upward, given the ongoing heat wave and the World Meteorological Organization's prediction that an El Nino warming event is likely over the next couple of months, the credit rating agency said.

"India's medium-term growth prospects are healthier. Over the next five fiscals, we expect GDP to grow at 6.8 per cent annually, driven by capital and productivity increases. What is also good to see is the increasing sustainability footprint of capex, " said Amish Mehta, Managing Director and CEO.

"At present, nearly 9 per cent of the infrastructure and industrial capex is green. We see this number rising to 15 per cent by fiscal 2027, " he added.

According to Dharmakirti Joshi, Chief Economist, India's external vulnerability is expected to decline with a narrower current account deficit (CAD) and modest short term external debt.

"While CAD is expected to narrow to 2.4 per cent of GDP (about $88 billion) next fiscal from an estimated 3 per cent (about $100 billion) this fiscal, its financing may face challenges as foreign portfolio flows remain volatile and external commercial borrowings are less attractive, " Joshi said.

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