India expected to grow at 6.3% in FY24: Ficci survey

New Delhi: India's economic growth is expected at 6.3 per cent during 2023-24 on the back of good health of the financial sector and uptick in private investment even as downside risks remain, said a survey by industry body Ficci unveiled on Monday.

The latest round of Ficci's Economic Outlook Survey pegs annual median gross domestic product (GDP) growth for 2023-24 at 6.3 per cent - with a minimum and maximum growth estimate of 6 per cent and 6.6 per cent, respectively, the chamber stated.

The median growth forecast for agriculture and allied activities has been put at 2.7 per cent for 2023-24. This marks a moderation vis-a-vis growth of about 4 per cent reported in 2022-23.

The El Nino effect has had an impact on the spatial distribution of rainfall this monsoon. Industry and services sector, on the other hand, are anticipated to grow 5.6 per cent and 7.3 per cent, respectively in current fiscal year, the survey shows.

Ficci said the survey was conducted in September 2023 and drew responses from leading economists representing industry, banking and financial services sector.

"Persisting headwinds on account of geopolitical stress, slowing growth in China, lagged impact of monetary tightening and below normal monsoons pose downside risks to growth," it said.

According to survey results, median GDP growth is estimated to slow down to 6.1 per cent and 6 per cent in Q2 2023-24 and Q3 2023-24, respectively – after posting a four-quarter high growth of 7.8 per cent in Q1 2023-24.

Further, the chamber said the median forecast for CPI based inflation has been put at 5.5 per cent for 2023-24, with a minimum and maximum range of 5.3 per cent and 5.7 per cent, respectively.

The survey participants opined that the course of inflation remains uncertain.

"There was an unanimous view among the participants that global growth is poised to slow in the current year vis-a-vis 2022, and this trend is expected to continue in the year 2024 as well," Ficci said, and added significant downside risks continue to remain on fore that could hamper the momentum in recovery.

Back home, the survey said though India's economic performance has remained relatively steady amid recent challenges, the country has not been unscathed from the external shocks.

Weak external demand is already reflecting in India's merchandise exports performance and is expected to be a drag on domestic growth, it added.

"Nonetheless, growth in India is expected to hold ground on the back of good health of the financial sector, robust urban demand, uptick in private investment as a result of government's front-loading of capex, pick up in real estate/construction sector and the forthcoming festive season," the survey said.

It further said Reserve Bank's policy repo rate is expected to remain unchanged until the end of current financial year. The latest survey results forecast repo rate at 6.5 per cent as at March-end 2024.

Economists were of the view that a cut in the repo rate is expected only by the end of the first quarter or second quarter of next fiscal year 2024-25, Ficci added.