New Delhi [India]June 5 (ANI): Morgan Stanley on Monday said that India’s GDP growth will exceed 6 per cent in the next two fiscal years, supported by strong domestic demand. It projected a growth of 6.2 per cent and 6.5 per cent for 2023-24 and 2024-25, respectively.
“We expect a confluence of cyclical and structural headwinds to propel growth,” Morgan Stanley said in a report titled ‘India Economics Mid-Year Outlook’.
“As such, we expect a broad-based recovery in consumption and capital formation thus keeping GDP strong.”
According to the provisional estimates released recently by the National Statistical Office (NSO), real GDP growth for 2022-23 stood at 7.2 per cent, higher than the estimated 7 per cent.
Despite strong global headwinds and tightening of tight domestic monetary policy, various international agencies have projected India to be one of the fastest growing economies in 2023-24, driven by strong growth in private consumption and sustained private investment. FAST supported.
On monetary policy by the central bank RBI, it has been stated that they expect macro stability to improve and will pave the way for a shallow repo rate cut cycle from the first quarter of 2024.
“We believe monetary policy remains pivotal and we expect rates to remain on hold in CY23 (2023) against the backdrop of low inflation and narrowing current account deficit. The report said we expect a shallow rate cut cycle (a cumulative 50 bp) from Q1 24 onwards, with a risk that rate cuts could start earlier as visibility of inflation recovery improves.
The repo rate, the interest rate at which the RBI lends to banks, is 250 basis points above the May 2022 low and 135 basis points above the pre-pandemic rate of 5.15 per cent. In the last policy meeting in April, the RBI Monetary Policy Committee unanimously kept the repo rate unchanged at 6.50 per cent.
Barring the April pause, the RBI raised the repo rate by 250 basis points cumulatively to 6.5 per cent from May 2022 in the fight against inflation.
Raising interest rates is a monetary policy tool that usually helps suppress demand in the economy, thereby reducing the rate of inflation.
Morgan Stanley’s report also finds mention about the inflation outlook.
It expects retail inflation for 2023-24 to be in line with projections for 2023-24 as compared to 6.7 per cent in 2022-23.
Retail inflation in India is projected to ease to 5.2 per cent for 2023-24, as projected by the RBI in its April monetary policy meeting; with 5.1 percent in the first quarter; Q2 at 5.4 percent; Q3 at 5.4 per cent; and Q4 at 5.2 percent.
“Risks to the inflation outlook in the near term would be weather-related shocks which would impact the food inflation trend,” the report said.
Last week, Morgan Stanley said in a separate report that India has risen in the world order in a short span of 10 years.
It cited some of the reasons that drove India’s growth – supply-side policy reforms, formalization of the economy, Real Estate (Regulation and Development) Act, digitization of social transfers, Insolvency and Bankruptcy Code, flexible inflation targeting, FDI on meditation, others. (ANI)
This report has been auto generated from ANI News Service. ThePrint is not responsible for its content.