India’s gross domestic product (GDP) growth for the fourth quarter at 6.1 percent came as a surprise to many, even as economists admitted to have not expected the expansion in agriculture and manufacturing that seems to have powered the surge in the fourth quarter of FY23. The forecasts for the quarter varied between 4.4 percent and 5.5 percent. The wide divergence, however, is not reason enough for economists to revise their forecasts for FY24 just yet.
CRISIL chief economist DK Joshi has retained the estimate for FY24 at 6 percent with a higher bias. He said the global environment will spill over adversely to India’s exports, which would impact sectors linked to exports. The impact is already visible in segments such as textiles.
“Service exports are doing well-they are more decoupled. But goods exports which form a bulk of our exports will be impacted,” he said.
“We are maintaining our growth at 6 percent, which is the highest in G20. I would say it’s pretty decent growth given the global volatility,” he added.
Aditi Nayar, chief economist, ICRA, concurred with Joshi. “Our baseline estimates are 6 percent. We are building a 50 bps (basis points) outside if the government continues to spend on infrastructure. There is a lot of money on the table for capital expenditure between the Centre and the states—that’s the upside we have.”
However, if the monsoons play truant, that could impact rural and agricultural growth and that could prove to be a downside. To top the 4 percent growth in agriculture could be a challenge if the rains are not evenly distributed and that’s another risk weighing on the economy for the current fiscal, said Nayar.
Surjit Bhalla, the former executive director of the International Monetary Fund and a former member of the Economic Advisory Council to the Prime Minister, is optimistic about the world economy and believes that growth in the global economy would benefit India.
“I also disagree with forecasters about the global recession—there is very little evidence
Germany has gone into a technical recession. I looked at the numbers of all countries. The world economy is in very good shape. There is some slowdown in the US but other economies are picking up. One factor helping India is that global growth will be higher than expectations,” he said.
The only shock he believes can shake the economy is if the geopolitical tensions flare up.
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