Govt spending sparks India’s economy despite inflation, geopolitical crises: Icra
NEW DELHI : Rating agency Icra Ltd credited the Indian government’s spending on infrastructure, apart from promising macroeconomic conditions and relatively stable commodity prices, for the country’s robust economic growth amid a sea of challenges. Icra joined the bandwagon of rating agencies predicting robust growth for India’s economy, which it said faced multiple challenges including inflation, rise in borrowing costs, sub-par monsoons, sluggish exports, the Red Sea crisis, and the effects of the Russia-Ukraine and Israel-Palestine conflicts.
The agency on Monday forecast India’s GDP growth at 7.6% for FY24, and at 6.5% for the just-begun FY25. India’s economy soared ahead in the December quarter (the third quarter of FY24) with a surprise growth of 8.4%, belying fears of tempering as the manufacturing, electricity and construction sectors put up a robust show.
Following this, the statistics ministry raised India's GDP growth estimate for FY24 to 7.6% in its second revised estimate, up from 7.3% in its first advance forecast. The Reserve Bank of India’s GDP growth estimate for FY24 is 7%, while the International Monetary Fund’s forecast is 6.7%.
Meanwhile, the average Consumer Price Index-based retail inflation is estimated to moderate to 4.6% in FY25, against 5.3% in FY24, though wholesale inflation may move back to a low 2-4% in FY25, up from -0.7% in FY24, Icra said. In the fiscal year ended 31 March (FY24), Icra upgraded two entities for every entity it downgraded, continuing an upgrade momentum that had been set in motion in FY22.
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