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. This aligns with expectations, given the resilient economy and strong fundamentals.
The latest ‘EY Economy Watch December 2024’ report estimated that by combining the real GDP growth of the first two quarters of FY25, at 6.7 per cent and 5.4 per cent, respectively, with the RBI’s revised growth estimates for the third and fourth quarters of FY25, at 6.8 per cent and 7.2 per cent, respectively, the annual FY25 real GDP growth may be projected 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 stated.
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 presents a mixed picture of the Indian economy’s growth momentum.
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 October 2024 level of 58.5, driven by strong international demand and improving business confidence.
As per data released by the Federation of Automobile Dealers Association, retail sales of motor vehicles continued to show double-digit growth of 11.2 per cent in November.
Notably, 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 added.
CPI inflation eased to 5.5 per cent in November from 6.2 per cent in October as vegetable prices dropped, while core CPI inflation remained steady at 3.7 per cent for the second consecutive month.
WPI inflation also moderated to 1.9 per cent in November, down from 2.4 per cent in October.
According to DK Srivastava, Chief Policy Advisor at EY India, medium-term real GDP growth prospects for India could remain at 6.5 per cent per year, provided the government accelerates capital expenditure growth in the remaining part of the current fiscal year. He also suggested the need for a medium-term investment pipeline involving the Government of India, state governments, their respective public sector entities, and the private corporate sector.
(Inputs from IANS)
