The Indian economy showed resilience in 2023 with strong GDP growth and strong GST collections, but inflation remained above the RBI target.
The Indian economy has shown remarkable resilience in 2023 with strong GDP growth and strong GST collections. However, inflation remains higher than the Reserve Bank of India’s (RBI) target of 4%.
India’s retail inflation, or inflation based on the consumer price index (CPI), was 4.87% in October, up from 5.02% in September and 6.83% in August. However, it rebounded in November and hit a three-month high of 5.5%.
In its latest policy meeting, the RBI kept its inflation forecast unchanged as it forecast inflation based on the Consumer Price Index (CPI) or retail inflation at 5.4% for FY24, with a third quarter forecast of 5.6 percent and a fourth quarter forecast of 5.2 percent. hundred. CPI inflation in the first quarter of FY25 is forecast at 5.2 per cent, in the second quarter at 4 per cent and in the third quarter at 4.7 per cent.
On the other hand, the RBI has raised its real GDP growth forecast for FY24 to 7%, from 6.5% previously, with Q3 GDP at 6.5% (vs. previous estimate of 6%. ) and fourth quarter GDP was 6%. (compared to previous estimate of 6%). The previous estimate was 5.7%).
RBI’s real GDP growth forecast for the first quarter of FY25 is 6.7 per cent, for the second quarter of FY25 it is 6.5 per cent and for the third quarter FY25 it is 6.4 per cent.
Mint spoke to several experts to gather their views on India’s inflation and economic growth trajectory in 2024. Here’s what they said:
Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings
India’s annual retail price inflation rose from 4.87% in October to 5.55% in November 2023. Agriculture production hit by five-year low monsoon in 2023 by ‘El Niño. As a result, the MPC will continue to be wary of inflation as the macroeconomic outlook is characterized by volatile and unstable food prices.
India’s GDP in fiscal 2024 is expected to grow by 6.7%. Going forward, India will emerge stronger thanks to key transformation factors, namely the consumption boom, the rise of the middle class and the green transition (demand side) and economic benefits. i.e. demographics, better access to finance and increased physical and digital infrastructure (supply side). In short, India is in an ideal situation.
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