Inflation to ease, FY24 GDP growth seen at 6.6%: Kotak Bank chief economist Upasna Bhardwaj

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int. She expects the headline inflation rate to ease to 4.5% by fiscal year 2025 (FY25) while projecting a GDP growth of 6.6% for FY24, below the government’s optimistic estimate of 7.6%. "The 6.6% itself shows a firm growth, especially in an environment where the global economy could slow down (further)," she said.

However, Bhardwaj cautioned that while certain sectors like power, hospitality, and electronics would likely propel growth, reviving consumer demand in rural areas could pose challenges. "We have seen urban demand holding up well and providing support for growth, but now we are seeing some signs of fatigue there. While rural demand has been patchy, there is a possibility of rural demand picking up post-good monsoons and elections.

But for now, we remain a little sceptical," she said. The Indian economy saw an unexpected surge, growing 8.4% in the December quarter, led by manufacturing, electricity, and construction sectors. This growth has prompted an upward revision of the GDP forecast for FY24 to 7.6% from an earlier prediction of 7.3%.

Bhardwaj identified food inflation as an ongoing risk but suggested that oil marketing companies have scope to further cut fuel prices, following initial reductions. India's consumer Price Index (CPI)-based retail inflation marginally decreased to 5.09% in February from 5.1% in January — still above the central bank's 4% target but within its 2-6% tolerance range. The period saw food and beverage prices surge above 7% for the fourth consecutive month, driven by increases in the prices of eggs, meat, fish, and vegetables.

Prices for clothing, footwear, housing, and transport, however, eased. "Post monsoons, we will have room for monetary easing. We are looking at the