Indian economy demonstrates strength & stability, GDP to grow at 6% in FY23: Acuite

Chennai: India's gross domestic product (GDP) growth will be at 6 per cent in FY24, said credit rating agency Acuite Ratings and Research.

In its monthly commentary on the economy. Acuite said that despite the global macro economy remaining characterised by contradictions and financial system instability risks coming to the fore, the Indian economy continues to demonstrate strength and stability.

Most lead indicators at the start of 2023 continue to display resilience, with incremental data Feb-23/Mar-23 faring better than Jan-23.

"Acuite expects GDP growth to moderate but still remain healthy at 6.0 per cent in FY24," the report said.

According to Acuite, there is a clear distinction emerging with respect to the strength of domestic demand -- which continues to display vigour, as against the impact of slowing external demand getting captured in reduced run-rate of merchandise exports (albeit in part also due to moderation in commodity prices), waning export orders within PMI and services exports coming off their Dec-22 peak (though still above trend).

"Looking ahead, challenges for domestic growth are expected to intensify in FY24 owing to -- 1) a Slowdown in global growth, with the added dimension of tightness in credit conditions post the banking sector turmoil 2) Climate risks especially a warmer summer along with El Nino risks 3) Private capex remaining uneven and sluggish and 4) downside in urban leveraged consumption owing to pass-through of higher borrowing costs," Acuite said.

According to Acuite, the moderation in inflationary pressures and the step up in public capital expenditure should continue to drive a healthy momentum in the domestic economy.