Economists, like those at Goldman Sachs Group and Barclays, predict that India's yearly economic growth would moderate to about 6% during the next several years. Moreover, that's supposedly not a terrible thing to have happen.
According to projections made by analysts from institutions such as Goldman Sachs Group Inc. and Barclays Plc., the annual rate of economic expansion in India is expected to decelerate to about 6% during the next few years. They point out that this is not always a negative development.
According to Rahul Bajoria of Barclays, a growth rate of approximately 6% for the gross domestic product would be optimal for Asia's third-largest economy in order to bring inflation back to the target set by the Reserve Bank of India and also to bring the budget and current account deficits under control. Since the beginning of 2022, price rises have been higher than the RBI's 2%-6% objective, and the central bank's goal is to bring it down to 4% by the end of 2024.
According to Santanu Sengupta of Goldman Sachs, a slowdown in growth would be beneficial for India. He anticipates that India's GDP expansion will relax to 6% in the next fiscal year, down from about 7.1% in the year that ended in March. "That would make the issues brought on by the twin deficits more manageable, "In reference to the budget and current account deficits, he said last week that.
After 190 basis points of key rate increases since May to tame inflation, the South Asian nation may lose its distinction as having the highest growth rate in the world. This may occur as a result of the fact that borrowing costs have returned to pre-pandemic levels. This may have an impact on demand. According to a poll conducted by Bloomberg of experts before Wednesday's release of the data, GDP most likely increased 6.2% in the three months to September from the same time last year. This represents a slowdown from the 13.51% increase seen in April-June.
According to Saugata Bhattacharya, the chief economist of Axis Bank Ltd., a slower rate of economic development in India would be compatible with a much deeper rate of economic contraction throughout the world. "The decreased demand will assist limit the current account deficit and permit a steeper glide path of inflation," he said. "[T]he increased supply will help keep prices stable.""
The Indian economy is expected to grow at a rate of 7% in the current fiscal year, which will finish in March, before decelerating to a rate of 6.1% in the following year. Additionally, it is anticipated that inflation would decrease from 6.7% in the current fiscal year to 5.1% in the financial year that will end in March 2024.
An prior projection for India's growth potential in the next five years was anywhere from 7% to 6.2%, but the International Monetary Fund (IMF) reported earlier this year that the prediction had dropped to 6.2%.
"The most important concern is that India's increasing growth differentials compared to the rest of the globe is a double-edged sword since it comes with it the dangers of a higher external deficit," "remarked Bajoria from Barclays.
According to Niranjan Rajadhyaksha, chief executive officer of Artha India, an economic research business, the Indian economy is in better form than the majority of other big countries, but its momentum would be hampered by the global downturn. This was said by Niranjan Rajadhyaksha. It would be wiser to consolidate for the time being rather than try for additional growth by encouraging domestic demand given the existing levels of inflation, trade deficit, and fiscal deficit."
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