India fiscal 2023-24 economic growth to fall below 7% on weak global cues

MUMBAI (ICIS)–India’s economy is projected to post a weaker growth for the next fiscal year ending March 2024 from the 7% estimate for the current year as the global slowdown is expected to continue hurting exports.

“The actual outcome for real GDP growth will probably lie in the range of 6.0% to 6.8%, depending on the trajectory of economic and political developments globally,” based on the Economic Survey presented by Indian finance minister Nirmala Sitharaman to the parliament on Tuesday, ahead of the national budget setting scheduled on 1 February.

The survey examined the performance of various sectors of the economy in the current fiscal year ending March 2023.

The Indian economy has recovered from the ill-effects of the coronavirus pandemic but continues to be affected by the global economic slowdown.

“The recovery of the economy is complete; non-banking and corporate sectors now have healthy balance sheets and hence, we don’t have to speak of pandemic recovery anymore, we have to look ahead to the next phase,” the country’s chief economic advisor V Anantha Nageswaran said at a televised press conference.

The International Monetary Fund (IMF) has pegged 6.8% economic growth in fiscal 2022-23, 6.1% for 2023-24 and 6.8% for 2024-25 this morning, largely unchanged from forecasts made in October 2022.

External headwinds will cause the deceleration in GDP growth for most Asian economies in 2023.

“Geopolitical frictions, persisting inflationary pressures, and subdued demand are expected to suppress global trade further in 2023. This is likely to affect many countries, including India, with the prospects of sluggish exports continuing into financial year 2023-24,” according to India’s own economic survey.

Commodity prices which had risen sharply due to the Russia-Ukraine conflict that began in late February 2022 have yet to reach pre-conflict levels.

High food and energy prices have kept inflation high for most of the current fiscal year.

Another problem is the continued downward pressure on the Indian rupee (Rs) given likelihood of further interest rate hikes by the US Federal Reserve, according to the survey.

India’s current account deficit is expected to stay high as imports would continue to rise amid a strong domestic economy, while the slowing global economy could slow down exports.

“The export outlook may remain flat in the coming year if global growth does not pick up in 2023,” according to the report.

Focus: India fiscal 2023-24 economic growth to fall below 7% on weak global cues

Focus article by Priya Jestin

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