Indian Economy Likely To Grow At 6.7% From FY24 To FY31: Study

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The Indian economy is expected to experience an average annual growth rate of 6.7 per cent until the end of the decade, according to CRISIL’s latest report. This growth rate is anticipated for the fiscal years 2024 to 2031, slightly surpassing the pre-pandemic average of 6.6 per cent. The main contributor to this growth trend would be capital, the report added.

This outcome stems from the government’s investment-oriented approach during a period when the private sector was hesitant to make investments.

The report noted that the government substantially elevated capital expenditure to aid infrastructure development and extended interest-free loans to states, reinforcing their own investment initiatives. It also states that following robust growth of 7.3 per cent in the current fiscal year, there will be a moderation of 6.4 per cent in the upcoming financial year.

“There is also a need to monitor the impact of the escalation of the Middle East conflict on energy and logistics costs,” it said.

The report indicates that in India, the inflation rate of 5.7 per cent in December 2023 was primarily influenced by the fluctuating prices of vegetables and inflation in foodgrains. “This will keep RBI cautious on the rate front as it eyes the four per cent inflation target,” CRISIL said.

The report further suggests that while the ongoing decline in core inflation and deflation in fuel prices is encouraging, the sustained high prices of food items, which carry significant weight in the consumer price index (CPI), pose a risk for their transmission to non-food components.

According to the CRISIL report, the US Federal Reserve is anticipated to reduce interest rates this year. However, uncertainties arise regarding the timing and extent of these rate cuts, given the robust labour market data and inflation levels higher than anticipated.

Also Read: ‘Not A politician’: Raghuram Rajan Dismisses Speculation About Rajya Sabha Seat

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