India Ratings and Research Raises FY24 GDP Growth Estimate to 6.2%.

India Ratings and Research Raises FY24 GDP Growth Estimate to 6.2%.

Asif Iqbal | September 20, 2023 | 04:57 PM IST | Breaking News, India | Follow on Google News

India Ratings and Research Raises FY24 GDP Growth Estimate to 6.2%.pic/ mint.

Sustained Government Capex and Deleveraged Balance Sheets Fuel Growth

India Ratings and Research, a part of the Fitch Group, has revised its GDP growth estimate for India in the fiscal year 2024 to 6.2%, up from the earlier projection of 5.9%. This positive outlook is driven by several key factors that indicate a potential uptick in the Indian economy.

Government Capex and Corporate Deleveraging

One of the primary factors contributing to this revised estimate is the sustained government capital expenditure. The government’s continued investment in infrastructure and development projects has injected much-needed stimulus into the economy, fostering growth in various sectors.

Furthermore, the improved financial health of corporations and the banking sector has played a crucial role in this upward revision. Deleveraged balance sheets among corporates have bolstered their capacity to invest and expand, while a healthier banking sector is better positioned to support economic growth.

Prospects of a New Private Corporate Capex Cycle

Another promising aspect cited in the report is the prospect of a new private corporate capex cycle. This development is seen as a significant driver of economic growth in the coming fiscal year. While private sector capex has been sluggish in recent years, signs of revival are emerging, especially in sectors like crude oil, base metals, power, and telecom. Moreover, there is a broad-based increase in capex activity across industries such as cement, chemicals, textiles, healthcare, and logistics.

Challenges Ahead: Export Slowdown and Tepid Manufacturing Growth

Despite the positive outlook, the report also highlights challenges that the Indian economy must overcome. One such challenge is the slowdown in exports, particularly evident during the April-July period, influenced by global headwinds and deficient monsoons. Tighter financial conditions, leading to higher interest rates and capital costs, have also impacted industrial growth, with manufacturing growth remaining tepid.

Consumption Trends and Income Disparities

The report sheds light on consumption patterns, indicating a skewed demand favoring goods and services predominantly consumed by households in the upper income bracket. Real wage growth for lower-income households has been negative since the fourth quarter of FY21, only recently turning marginally positive in the third quarter of FY23. In contrast, households in the upper income bracket have experienced substantial real wage growth ranging from 9.5% to 12.7% from the first quarter of FY22 to the fourth quarter of FY23.

Private Corporate Investment on the Horizon

In a related development, a study published in the RBI August bulletin titled “Private Corporate Investment: Performance and Near-term Outlook” suggests that a new private corporate capex cycle is on the horizon. This study predicts that private sector capex spending could reach a decadal high in FY24, further contributing to India’s economic growth.

Rising Optimism in Economic Growth

S&P Global Market Intelligence has also revised its FY24 growth estimate for India, forecasting a 6.6% expansion, up from the earlier projection of 5.9%. This revision is attributed to the buoyant economic growth momentum recorded during the first quarter of FY2024.

Asif Iqbal

Asif Iqbal is a seasoned news writer with a passion for delivering the latest updates to the public. Currently serving as the senior writer at VoM News, a prominent news outlet known for its comprehensive coverage of diverse topics, Asif has established himself as a reliable source of information. With a keen eye for detail and a knack for storytelling, he consistently provides readers with well-crafted articles that cover a wide range of news categories. His dedication to journalistic integrity and his commitment to staying ahead of the news curve make him an invaluable asset to Vom News, ensuring that readers are always well-informed on the issues that matter most. You can find his work and stay updated on current events by visiting vomnews.in.