India is projected to witness 6.5 per cent real GDP growth in the current and next fiscal (FY25 and FY26), according to a report on Wednesday, which is in line with the expectation amid a resilient economy and strong fundamentals.
The latest ‘EY Economy Watch December 2024’ projected that combining the real GDP growth of first two quarters of FY25 at 6.7 per cent and 5.4 per cent, respectively, with RBI’s revised growth estimates for 3Q and 4Q FY25 at 6.8 per cent and 7.2 per cent, respectively, “the annual FY25 real GDP growth may be estimated at 6.6 per cent”.
“However, if the turnaround in GoI’s investment expenditure remains subdued, Q3 growth may be 6.5 per cent or less,” the report mentioned.
The real GDP growth eased to 5.4 per cent in the July-September quarter (Q2 FY25), compared to 6.7 per cent in the preceding quarter.
The available high frequency data for October and November point to a mixed picture regarding the growth momentum of the Indian economy.
Headline manufacturing PMI witnessed a softer expansion of 56.5 in November compared to 57.5 in October. Services PMI, however, remained nearly stable at 58.4 in November 2024, close to its level of 58.5 in October 2024, on account of strong international demand and improving business confidence.
As per the data released by the Federation of Automobile Dealers Association, retail sales of motor vehicles continued to show a double-digit growth of 11.2 per cent in November.
In particular, retail sales of two wheelers and tractors showed robust growth rates of 15.8 per cent and 29.9 per cent, respectively, in November 2024, according to the EY report.
“October 2024 witnessed an increase in IIP growth to 3.5 per cent, up from September’s 3.1 per cent, driven by stronger manufacturing and electricity production,” the report mentioned.
CPI inflation eased to 5.5 per cent in November from 6.2 per cent in October as vegetable prices eased, whereas core CPI inflation remained steady at 3.7 per cent for the second successive month.
WPI inflation also moderated to 1.9 per cent in November from 2.4 per cent in October.
According to DK Srivastava, Chief Policy Advisor, EY India, in the medium-term, India’s real GDP growth prospects can be kept at 6.5 per cent per year, provided the government accelerates its capital expenditure growth in the remaining part of the current fiscal year and comes up with a medium-term investment pipeline “with participation from the GoI and state governments and both their respective public sector entities, and the private corporate sector”.
