India’s economic growth is expected to be below 6% in the fiscal year 2023-2024, according to a report by India Ratings and Research (Ind-Ra). The report highlights the challenges faced by the Indian economy, including high inflation, rising interest rates, and slowing global growth.
The report predicts that India’s GDP growth rate will be around 5.5% in FY24, a significant drop from the 8.4% growth rate recorded in FY21. The slower growth rate is attributed to several factors, including the impact of the COVID-19 pandemic, supply chain disruptions, and rising commodity prices.
Inflation is also a major concern, with the report predicting that the Consumer Price Index (CPI) inflation rate could reach 6.2% in FY24, well above the Reserve Bank of India’s target range of 2-6%. High inflation rates could lead to a further increase in interest rates, which would negatively impact investment and consumption.
The report also highlights the challenges faced by India’s banking sector, including rising non-performing assets (NPAs) and low capital adequacy ratios. The banking sector is a key driver of economic growth, and any weaknesses in the sector could further impact the economy.
The report does offer some hope, however, as it predicts that the Indian economy will start to recover in the second half of FY24, with growth rates improving to around 6%. The report also notes that the Indian government’s focus on infrastructure development and the implementation of structural reforms could help to boost the economy in the long term.
The Indian government has already taken several steps to address the challenges faced by the economy, including reducing corporate tax rates and implementing a series of economic reforms. However, the report suggests that more needs to be done, particularly in the areas of job creation and rural development.
The report does offer some hope, however, as it predicts that the economy will start to recover in the second half of FY24, and that the government’s focus on infrastructure development and structural reforms could help to boost the economy in the long term.