The RBI projects real GDP growth for FY24 at 6.5% and 7.8% to 8% for the first quarter.
India’s macroeconomic landscape, even in the face of headwinds, showcased robust performance in the first quarter of FY24, mainly driven by the resilience of the services sector, reports SBI.
The Ecowrap report highlights that the IMF has projected India’s growth at 6.1% in 2023, a 0.2 % point upward revision. This can be due to a ‘stronger than anticipated’ growth in domestic investment during Q4 2022.
Factors such as central banks’ swift interest rate hikes to combat persistent inflationary trends have weighed down economic activities worldwide. Moreover, extreme climatic events and escalating geopolitical tensions have added multifold dimensions to the risk landscape.
GDP Growth
In stark contrast to the International Monetary Fund’s (IMF) forecast of a global growth slowdown to 3% in both CY23 and CY24, India’s growth trajectory seems more robust, SBI reports.
The IMF’s prediction takes into account the impact of central banks’ aggressive rate hikes to counter persistent inflation trends, which has subdued economic activities worldwide. Further, the reports says that the services sector has been the driving force behind India’s positive economic performance in the first quarter of FY24.
Inflation Amid Monetary Tightening
Inflationary pressures have been a common concern in both global and Indian economic contexts.
The rapid rate hikes by central banks to combat sticky inflation have impacted global economic activities, leading to the IMF’s projection of a decline in global growth. In India, states the report, managing inflation amidst monetary tightening has been a challenge. However, with prudent economic policies and measures, India has managed to maintain its growth trajectory.
Sectoral Trends
India’s growth story in FY24 has been particularly remarkable in light of global sectoral trends. Internationally, non-services sectors, especially manufacturing, have faced challenges, leading to a broader slowdown in economic activities, reported SBI.
On the other hand, India’s manufacturing sector has remained resilient, evidenced by favorable Index of Industrial Production (IIP) data, robust automobile sales, and encouraging Purchasing Managers’ Index (PMI) figures.
Even as international trade and manufacturing in emerging markets slowed down due to weakened industrial production in advanced economies, India’s economy demonstrated its ability to navigate these challenges, noted the report.
Bank Credit Growth
The State Bank of India report highlights a sustained double-digit credit growth in the sector, showcasing broad-based expansion across various industries. Scheduled Commercial Banks (ASCBs) reported impressive credit growth of 19.7% in FY24’s first quarter, reflecting robust economic activity and a growing demand for credit.
This trend only demonstrates the resilience and adaptability of the Indian economy, which has demonstrated its ability to maintain a growth trajectory despite global headwinds.
