Indian economy to grow at 6% in FY24, say NIPFP researchers

Indian economy is likely to grow at 6% as global growth slowdown and lagged monetary policy effect weighs on growth, NIPFP researchers contended in the mid-year macroeconomic review on Friday.

The researchers pointed that the industrial growth in the first quarter of FY24 has been buoyant especially in the construction and consumer non-durables sectors.

"The buoyance in consumer non-durable points to broad-based growth," said Rudrani Bhattacharya, associate professor, NIPFP.


The agricultural growth and services growth remained sluggish in the first quarter, NIPFP researchers indicated.

"Lagged effect of monetary transmission will persist for a few quarters and global growth slowdown will also impact growth," NIPFP indicated as reasons for growth slowing down from 7.2% in FY23.

The Reserve Bank of India's Monetary Policy Committee held rates at 6.5% for a third consecutive time in its August meeting.

While the growth forecast of the policy think tank was lower than the Reserve Bank of India's estimate of 6.5% and in line with the IMF's revised forecast of 6.1%, it was more optimistic on the inflation front.

NIPFP indicated that inflation will decline to 5.1% in FY24. "There has been a broad based decline in food, energy and core inflation."

It pointed to volatile weather conditions and global food supply as upward risks, whereas it said that the continuing effect of monetary policy will be the moderating factor.

On the fiscal front, NIPFP said that the target of 4.5% fiscal deficit by FY26 will be challenging for the government.

"A lot of effort would be needed from the government to achieve the FY26 target," said Manish Gupta, associate professor, NIPFP.