India’s GDP growth to fall to 6.2% in FY24: Goldman Sachs

New Delhi, November 20

India is likely to record a GDP growth of 6.2% in the current fiscal (2023-24), which will increase to 6.5% in the next 2024-25 fiscal, said American brokerage Goldman Sachs on Monday. Its expectation for the current fiscal is in line with the projections made by other credit rating agencies and multilateral banks. However, it is less optimistic than the projection by the RBI whose chief Shaktikanta Das said the GDP figures for the second quarter of the current fiscal are likely to surprise many.

The main domestic risk to achieving this growth comes from General Election, especially during the April-June quarter of 2024. “We expect the government to intervene through subsidies or other measures to keep a lid on food prices in an election year,” it said. The current account deficit will widen to 1.9% of GDP in calendar 2024 from the expected 1.3% in calendar 2023 while inflation in 2023 will be 5.7% but will come down in calendar 2024 to 4.7%.

On a calendar year basis, the GDP growth in 2023 will be 6.4%, which will, however, decline to 6.3 per cent in 2024. Explaining the dichotomy, Goldman Sachs said the next calendar year will be of two halves. The government spending in the first half, before the upcoming General Election, will be the key driver for growth. After the elections, the main driver of investment growth will only be the private sector, is said in the report.

Goldman Sachs has predicted that India is on the path of becoming the world’s second largest economy by 2070 because of two major reasons. The dependency ratio will be one of the lowest among regional economies, meaning there will be more people in the working-age population than the children and elderly. Second, India has made more progress in innovation and technology than what the world has realised, wrote Santanu Sengupta, Goldman Sachs Research’s India economist. It now needs more emphasis on skilling in order to increase worker productivity.

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