(MENAFN- KNN India) New Delhi, May 7 (KNN) India Ratings and Research (Ind-Ra) has upgraded its GDP growth forecast for India to 7.1 per cent for the fiscal year 2024-25, up from its previous estimate of 6.5 per cent.
The rating agency cited sustained government capital expenditure and deleveraged corporate and bank balance sheets as key drivers supporting the growth momentum.
While Ind-Ra's growth projection is slightly higher than the Reserve Bank of India's forecast of 7 per cent, the firm expects the Gross Value Added (GVA) growth to remain at 6.9 per cent, similar to the previous year.
Private consumption expenditure is anticipated to rise by 7 per cent this year, a three-year high, aided by the forecasted above-normal monsoon, which could boost rural consumption trends.
However, Ind-Ra emphasised the need for sustained real wage growth in lower-income households to support a broad-based and sustainable recovery in consumption demand.
The rating agency finds the government's fiscal deficit target of 5.1 per cent of GDP for 2024-25 challenging but achievable.
Goods imports are expected to grow faster than exports at 6.2 per cent and 5.1 per cent, respectively, leading to a goods trade deficit of USD 280.7 billion, up from around USD 240 billion in the previous fiscal year.
Despite the trade deficit, remittances and software exports are projected to help maintain the current account deficit at a manageable level of USD 46.3 billion or 1.2 per cent of GDP, according to Ind-Ra.
While consumption demand and exports pose constraints, the overall economic outlook remains positive, supported by continued government spending and improving corporate and banking sector balance sheets.
(KNN Bureau)
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