The Federation of Indian Chambers of Commerce and Industry (FICCI) released its most recent Economic Outlook Survey on Monday, predicting 6.3% growth in the economy in FY24. Contributing factors are anticipated to include the strong financial sector, strong urban demand, an increase in private investment over the government’s front-loading of capital expenditures, a pick-up in real estate, and the festival season.
The survey stated “The latest round of the survey puts forth an annual median GDP (gross domestic product) growth forecast for FY24 at 6.3% – with a minimum and maximum growth estimate of 6% and 6.6%, respectively. The GDP growth is expected to moderate in 2023-24, from the 7.2% growth number clocked in the year 2022-23”.
Eminent economists from the banking, financial services, and industry sectors participated in this survey which was conducted in September 2023.
Furthermore, the survey highlighted that growth is vulnerable to negative externalities such as ongoing geopolitical tensions, China’s slowing economic development, the delayed effects of monetary tightening, and a monsoon that is below average.
The growth in agricultural and related industries is anticipated to decrease to 2.7% in the current fiscal year from 4% in FY23 due to El Niño’s influence on the monsoon season’s rainfall distribution. Meanwhile, the growth in the industry and services sectors is predicted to be 5.6% and 7.3%, respectively.
According to the survey, the direction of inflation is still unknown because CPI-based inflation is predicted to stay at 5.5% in FY24, with a range of 5.3% to 5.7% at the lowest and 5.7% at the highest points.
The survey mentioned “The CPI (Consumer Price Index) inflation rate may have peaked, but upside risks to prices remain on fore. Prices of cereals have remained sticky. The acreage coverage of pulses and oilseeds under kharif crops has reported a contraction.
The cancellation of Black Sea grain deal could impact India as it imports a major share of its sunflower oil from Ukraine and Russia. The spike in weather-related uncertainties have witnessed an increase in recent times and would continue to add to the volatility in food prices. The recent escalation in crude prices could also add to the inflation buildup”.
Regarding investments, the survey observed that the government’s emphasis on capital spending has prompted a surge in private investments and supported the momentum of expansion. However, it will take some more time for investments to get a true momentum, and any further rebound in private investments will be driven by an increase in both domestic and international consumption activities.
