India’s GDP to grow 7 percent in FY23, 6 percent in FY24: Acuite Ratings

However, the rating agency forecast that the country’s economic growth would slow to 6 percent in fiscal 24. India would still be one of the fastest growing economies in the world, it said.

According to Acuite Ratings, the Indian economy has managed to weather the headwinds fairly well in recent months despite the difficult global environment.

“Domestic growth momentum has gained strength as urban consumption continues to drive demand for goods and services, with derived support coming from the government’s investment cycle, which received a further boost from the Union’s 2023 budget,” Acuite Ratings said.

Private investment remains somewhat constrained, unsurprising in an environment of heightened global uncertainty, although higher credit growth reflects the start of a trickle, it said.

The rating agency also said the breadth of domestic economic activity should continue to find support from a healthy Rabi harvest and improved rural demand, the strength of service sector exports, pent-up demand in the travel and tourism sectors, and consistency from central government focus focus on increasing capital spending.

“Yet, growing risks to the growth outlook come from the impending slowdown in global demand in 2023, with domestic export growth contracting 12.2 percent year-on-year on December 22 – meaning the sharpest contraction in two years, which is seen as a harbinger of tougher times that lie ahead,” said Acuite Ratings. In addition, the continued rise in interest rates and a relatively tighter liquidity environment could have a delayed impact on demand, it added.

(With input from IANS)