India Ratings revises India's FY24 GDP growth estimates to 6.2%

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industrial growth, especially manufacturing growth continues to be tepid," the report said. The Indian economy grew at 7.8% in the first quarter of the current fiscal year on higher government and private capital expenditure, and strong services growth. “All these risks will continue to weigh and restrict India’s GDP growth to 6.2% in FY24 (FY23: 7.2%), and the quarterly GDP growth, which came in at 7.8% in 1QFY24, is slated to slow down sequentially in the remaining three quarters of FY24," said Sunil Kumar Sinha, Principal Economist, India Ratings and Research.

“While the Reserve Bank of India (RBI) is expecting the same, it estimates the overall FY24 GDP to come in at 6.5%." The Reserve Bank of India (RBI) has forecast Q1FY24 real GDP growth at 7.8% and full-year growth at 6.5%. India Ratings doesn't expect consumption demand to be broad based during the ongoing fiscal. According to the agency, private final consumption expenditure (PFCE) is expected to grow 6.9% annually in FY24 compared with a 7.5% expansion in FY23.

"The PFCE growth increased to 6.0% in 1QFY24 after languishing below 3% in 2HFY23. Wage growth is critical for consumption growth," it said. "However, the data shows that the real wage growth of households belonging to the lower income bracket has been negative since 4QFY21 and became marginally positive only 3QFY23," it said adding that the real wage growth of households belonging to the upper income bracket rose in the range of 9.5% to 12.7% during 1QFY22 to 4QFY23.