India’s economic activity has continued to remain stable and its positioned relatively better than most economies despite the prevailing global uncertainties. The stability in India’s growth momentum can be validated by certain high-frequency indicators that have not only recorded higher annualized growth rates but have also been registering sequential improvements.
Even as global growth is set to weaken or enter into recession in 2023, the Indian economy may not slow down and is likely to maintain the pace of expansion witnessed in 2022-23
The growth so far has been supported by healthy private consumption amid pent-up demand, alongside a faster resumption in contact-intensive services sectors and the government’s continued thrust on capital expenditure. While this momentum is expected to sustain, the gradual waning of the pent-up demand, the sluggish pace of private capex recovery, unfavorable weather ahead of the rabi harvest season along with continued financial tightening could serve as potential risk factors from the domestic perspective.
Currently available forecasts of the country’s real GDP growth for 2023-24, including those of the RBI, settle between 6 and 6.5 percent. India’s real GDP can go up from Rs 159.7 lakh crore in 2022-23 to Rs 169.7 lakh crore in 2023- 24 as it is currently being projected.
Globally, while bouts of high volatility persist, overall growth prospects have turned out to be stronger than earlier anticipated. Nevertheless, still elevated inflationary pressures and expectations of higher interest rates for longer could impact global growth and thereby weighing down India’s growth trajectory.