This is the primary time the nation has reached the milestone and marks a big step in direction of its $5 trillion economy aim.

Q2 GDP Surprise

There is a “wide consensus” supported by economic forecasts that actual gross home product (GDP) development within the second quarter will grow to be higher than the Reserve Bank of India’s (RBI) projection of 6.5 percent, an article in the central bank’s November bulletin said on November 16.

India’s economy expanded 7.8 percent in the first three months of the financial year and RBI governor Shaktikanta Das recently expressed confidence in the domestic economy. 

“Looking at the momentum of economic activity—a few early data points have come in—I expect Q2 GDP numbers which will come at the end of November in all probability will surprise on the upside,” Das mentioned on October 31.

The optimism that actual GDP development can be greater than 6.5%, the article mentioned, seems to be supported by company outcomes for the September quarter.

Analysts’ Opinion

India’s financial growth prospects should remain strong over the medium time period, with GDP increasing 6-7.1 p.c yearly in fiscal years 2024-2026, S&P Global Ratings mentioned on November 16.

In a report titled ‘Global Banks Country-By-Country Outlook 2024’, S&P mentioned the banking sector’s weak loans will decline to 3-3.5 p.c of gross advances by March 31, 2025, on the again of structural enchancment, together with wholesome company stability sheets, tighter underwriting requirements, and improved risk-management practices.

The report mentioned that world uncertainties could have a lesser affect on the Indian economic system.

Slower world development and exterior demand will weigh on financial exercise and will gas additional inflation. However, on condition that India is domestically oriented, the company expects the financial development to be much less affected, it added.

“Economic growth momentum to continue. India’s economic growth prospects should remain strong over the medium term, with GDP expanding 6-7.1 percent annually in fiscal years 2024-2026,” S&P mentioned.

Meanwhile, Morgan Stanley Research on November 13 mentioned it expects India’s economic growth at round 6.5 p.c for FY2024 and FY2025, citing robust home fundamentals.

The analysis arm of the funding financial institution, in its 2024 India Economics Outlook, mentioned the home demand supported by power in company and monetary sector stability sheets and the follow-through of coverage reform measures will support India’s development amid a world slowdown.

Recently, Moody’s Investor Services retained India’s financial development at 6.7 p.c for 2023, citing the nation’s outstanding resilience amid a world slowdown buoyed by stable home demand.

The International Monetary Fund (IMF) has additionally raised its 2023-24 development projection for India, to six.3 p.c from its July estimate of 6.1 p.c, citing stronger-than-expected consumption throughout Q1.

The Reserve Bank of India (RBI) estimates development at 6.5 p.c for FY24.

Government Roadmap

The government’s roadmap to making India a $5 trillion economy includes measures like specializing in inclusive development, selling digital economic system, fintech, technology-enabled growth, vitality transition, and local weather motion, and counting on a virtuous cycle of funding and development, minister of state for finance Pankaj Chaudhary mentioned in August.

Responding to an unstarred query within the Rajya Sabha, Chaudhary mentioned that main reforms like Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), a big discount within the company tax charge, the Make in India and Start-up India methods, and Production Linked Incentive Schemes (PLIs), amongst others, will provoke development of the Indian economic system.

Chaudhury mentioned that the Union Budget 2023-24 has taken additional steps to maintain the excessive development of India’s economic system, which embody a considerable improve in capital funding outlay for the third 12 months in a row by 33 p.c to ₹10 lakh crore (3.3 p.c of GDP).

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Updated: 19 Nov 2023, 01:55 PM IST