The National Institute of Public Finance and Policy's (NIPFP) mid-year macroeconomic review forecasts India's annual economic growth in the range of 6.9-7.1%, similar to most other forecasts, such as the International Monetary Fund's (7%), World Bank's (7%) and Reserve Bank of India's (7.2%). Thus, the economy is expected to grow by around 7% in 2024-25 on top of 7% and 8.2% in 2022-23 and 2023-24 respectively. India is back on the high growth path that prevailed before growth decelerated from 2017-18 onwards due to repeated shocks culminating in a sharp contraction in 2020-21 on account of the covid pandemic.
However, there has been some growth moderation in the first quarter of 2024-25 due to a large trade deficit and also contraction in government consumption on account of restrictions under the election code-of-conduct. On the supply side, there has been a contraction in mining and electricity and a slowdown in construction, capital goods, consumer durables, tourism, travel and financial services.
Headline inflation fell below the 4% target in August but has increased again in September due to high inflation of food prices. NIPFP's annual inflation forecast at 4.3% is marginally lower than the Reserve Bank of India (RBI) forecast of 4.5%. The upside risk factors include persistent high food price inflation and a rebound of core inflation.
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