India sees GDP growth slowing on global weakness

Demand in the economy will remain “brisk” in 2023/24 as “a vigorous credit disbursal and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors,” the survey said. However, this could mean that the current account deficit might stay high, because a strong domestic economy would support imports while exports were expected to ease due to weakness in foreign markets. India forecast economic growth of 6% to 6.8% in the 2023/24 fiscal year, slowing from the 7% growth projected for the current year ending on March 31, as a global slowdown is likely to hurt exports. The finance ministry’s released its annual Economic Survey and Finance Minister Nirmala Sitharaman presented it to parliament on Tuesday, a day before she is set to unveil the government’s budget for the coming fiscal year. The economic growth forecast for 2023/24 is higher than the International Monetary Fund’s projection of 6.1%, as the finance ministry expects the global weakness will be partially offset by strong domestic demand. The report, prepared by Chief Economic Adviser V Anantha Nageswaran, said its baseline scenario was for 6.5% growth in 2023/24, which would still make India one of the fastest growing economies. “The actual outcome for real GDP growth will probably lie in the range of 6.0% to 6.8%, depending on the trajectory of economic and political developments globally,” it said. For India, on balance, a modest slowdown in global growth would be beneficial as it would help bring down commodity prices and ease inflation concerns, Nageswaran told a news briefing after the release of the survey. India’s economy has rebounded since the COVID-19 pandemic. But the Russia-Ukraine conflict has triggered inflationary pressures and prompted central banks, including India’s, to reverse ultra-loose monetary policy adopted during the pandemic. The survey said inflation was not high enough to deter private consumption