S&P has kept India’s FY24 growth forecast at 6%, citing global economic slowdown and rising monsoon risks.

S&P Global Ratings on September 25 retained India’s growth forecast for the current fiscal year at 6 percent, citing a slowdown in the global economy, the risk of abnormal monsoons and the delayed impact of rate hikes.

The rating agency considers the recent uptick in vegetable price inflation to be temporary, but has raised its full fiscal retail inflation forecast to 5.5 percent from 5 percent due to rising global oil prices.

In its economic outlook for Asia Pacific Q4 2023, S&P said, “Growth this year will be weaker than in 2022, but our outlook remains broadly positive. Despite a strong expansion in India in the June quarter, we maintain our forecast for FY2024 (ending March 2024), given the slowdown in the global economy, the lagged effect of rate hikes and the rising risk of abnormal monsoons.

For FY 2022-23, India’s growth rate is pegged at 7.2 percent, higher than the RBI’s estimate of 7 percent. However, the pace of growth remained sluggish compared to 9.1 percent recorded in FY22.

As for S&P, the rating agency maintained its growth forecast for the current fiscal at 6 percent, while S&P said India’s economy will grow at 6.9 percent in both fiscal years 2024-25 and 2025-26. It also said India’s consumption growth and capital spending were „strong” in the June quarter.

As for 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 a domestic slowdown.

„Overall, growth in the region has been generally resilient. Year-on-year GDP growth picked up in the second quarter in both advanced and emerging Asian economies. India again led the way, with GDP growing 4.2 percent in the quarter, up 7.8 percent from a year ago,” S&P said.

Earlier on September 20, India Ratings and Research had revised India’s GDP growth estimate for FY24 to 6.2 percent from 5.9 percent, citing prolonged government restraint, reserved balance sheets of corporates and the banking sector, and the prospect of a new private corporate capex cycle. However, it warned that the Indian economy faces challenges due to lower exports, which contracted in the April-July period amid global intervention and lack of monsoon rains.

(With inputs from PTI)