PROMISING PROSPECTS

FY24 augurs well for the Indian economy

The new financial year began on 1st April of this year, and the economic outlook for India this fiscal year (FY24) is cause for optimism. The Indian economy appears to have recovered from the Covid-19-induced shocks, as well as the general economic downslide that followed. India seems to be on course to emerge as the one bright spot in an otherwise troubled global economic environment.

India's GDP growth in the current fiscal year (FY24), which runs from 1st Apr '23 to 31st Mar '24, is projected to be over 6%, according to India's central bank, the Reserve Bank of India (RBI), and the World Bank (WB). This suggests a healthy growth rate for the Indian economy.

Data from the last two months of the previous fiscal year (February and March '23), regarding inflation and the Index of Industrial Production (IIP) figures, is also encouraging. If this trend continues over the next few months, then India could clock healthy economic growth this fiscal year.

Inflation, especially retail inflation, which is highly critical for India, moved southwards, in March. It fell below the 6% mark for the first time this calendar year, to 5.66%. This was only the third time in the last 15 months that retail inflation had fallen below 6%.

The last time India clocked this level of inflation was in December '21. After that, inflation stood above the Reserve Bank's upper tolerance level of 6% for ten consecutive months.

Indian consumers faced an average inflation of 6.66% throughout 2022-23. However, in March, inflation dipped and is likely to recede further over the next few months.

The Reserve Bank has paused its interest rate hikes to rein in inflation this month - the repo rate presently stands at 6.50%.

The apex bank has projected inflation in the country to moderate to around 5.2% this year.