Indian Economy: S&P Global Rating kept India’s growth rate at 6 percent, said this on global economy
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S&P Global Rating on Indian Economy: American rating agency S&P Global Ratings has once again maintained the growth rate of India’s economy at six percent. Along with this, the agency has also said some things regarding the global economy. S&P said that due to the slowing of the global economy, the increasing risk of a below-normal monsoon and the pending impact of the rate hike, it has kept the growth rate of the Indian economy at six percent. In its rating, the agency considered the recent rise in vegetable prices to be temporary but raised the full fiscal retail inflation forecast to 5.5 percent from 5 percent earlier on higher global oil prices. It is noteworthy that earlier, India’s top bank RBI had also supported maintaining the monetary policy rate in view of food inflation. Along with this, banks are constantly monitoring the market situation.
Economy will remain weaker than 2022
S&P agency said in the ‘Economic Outlook for Asia Pacific Quarter-4 2023’ report that the growth rate this year will be weaker than in 2022, but our outlook remains broadly favorable. Despite strong expansion in India in the June quarter, we maintain our outlook for FY2024 (ending March 2024) given the slowing global economy, the pending impact of rate hikes and the increased risk of an abnormal monsoon. The Indian economy had grown by 7.2 percent in the financial year 2022-23 ending March 2023. While maintaining its growth forecast for the current financial year at six percent, S&P said that India’s economy will grow by 6.9 percent in the financial years 2024-25 and 2025-26. S&P said India’s consumption growth as well as capital expenditure remained strong in the June quarter. On growth in the Asia Pacific region, S&P said it remains a multi-speed region and slightly raised its forecast for 2023 to 3.9 percent amid domestic resilience.
Rating was released earlier in August
Earlier, the rating agency had released its report on August 4. In this, S&P had expressed the possibility that if India grows at an average rate of 6.7 percent for the next seven years, then its economy will be worth $ 6,700 billion by the year 2031, which is currently $ 3,400 billion. The growth rate of India’s gross domestic product (GDP) in the financial year 2022-23 was 7.2 percent. S&P Global had said these things in its report titled ‘Look Forward: India’s Money’. However, it has said that due to global slowdown and delayed impact of Reserve Bank of India (RBI) policy rate hike, the growth rate may slow down to six percent in the current financial year. This report was jointly prepared by Paul Grunewald, Global Chief Economist of credit rating agency S&P Global Ratings, Dharamkirti Joshi, Chief Economist of CRISIL and Rajeev Biswas, Chief Economist (Asia-Pacific) of S&P Global Market Intelligence. In the report, he had said that we are expecting that India will grow at an average rate of 6.7 percent from the financial year 2023-24 to the financial year 2030-31. With this, the country’s GDP will increase from $3,400 billion to $6,700 billion in the financial year 2022-23. During this period, per capita gross domestic product will also increase to around $4,500.
Next decade challenging for India
S&P’s previous report said that the major challenge for India in the coming decade will be to transform traditionally unbalanced growth into a high and stable trend. India can move on this path with rapid investment in infrastructure and manufacturing sector by the government and private sector. CRISIL Chief Economist Dharamkirti Joshi said that growth will peak in the financial year 2025-26. According to the report, India is likely to benefit from reforms like Goods and Services Tax. Apart from this, with the implementation of the Insolvency and Bankruptcy Code, things will also improve in terms of debt.
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