New Delhi: Economic think tank NCAER has projected that India's economy will grow closer to 7.5 percent in the current fiscal year, buoyed by optimistic factors including expectations of above-normal monsoon and a stable global economic environment.
High-frequency indicators indicate that India's domestic economy has displayed resilience, prompting all major agencies to revise upward their growth projections for 2024-25. The projected GDP growth for the current fiscal year ranges between 7.2 percent and 6.2 percent, according to NCAER.
Poonam Gupta, Director General of NCAER, expressed confidence that GDP growth in 2024-25 could exceed 7 percent, potentially nearing 7.5 percent. She said that this optimistic outlook is supported by robust economic activity observed in the first quarter, a focused policy approach on investment and growth, and expectations of a normal monsoon season.
Regarding monetary policy, Gupta noted that with inflation appearing to have peaked, further tightening is unlikely. She highlighted the benign global economic conditions, devoid of significant known risks thus far. Gupta acknowledged challenges in controlling food prices, emphasizing the need for a comprehensive policy framework. This includes promoting climate-resilient food supply and transitioning towards packaged and preserved food to manage periodic supply-demand gaps.
Recently, the Reserve Bank of India (RBI) forecasted a GDP growth rate of 7.2 percent for FY25. Retail inflation decreased to a 12-month low of 4.7 percent in May, although food inflation remained elevated. The RBI, guided by its inflation target of 4 percent with a tolerance band of 2 percent on either side, primarily considers consumer price index (CPI) inflation in its monetary policy decisions.
NCAER pointed out that despite a slight slowdown in May, the Purchasing Managers' Index (PMI) for both manufacturing and services sectors indicated expansionary momentum. Furthermore, the growth in the Index of Industrial Production (IIP) for core industries accelerated in April 2024. Goods and Services Tax (GST) collections remained robust year-over-year, while bank credit growth, though showing some deceleration in personal credit, remained above 20 percent. The outlook for the farm sector remains positive with expectations of 'above normal' monsoon conditions, despite deficient rainfall in June.
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