Several reports were released last week regarding India’s growth prospect. ADB has lowered its growth forecast for the country from 6.4 percent to 6.3 percent, pointing out likely effects of slowing exports and erratic rainfall. However, on the back of higher private investment and industrial production, the growth projection for the next financial year is retained at 6.7 percent. Notably, the regional development bank raised its inflation projection for India for 2023-24 to 5.5 percent.

Meanwhile, global rating agency S&P Global Ratings has retained its 2023-24 growth forecast for India at 6 percent. On inflation front, it raises the retail inflation forecast to 5.5 percent from 5 percent earlier, citing higher global oil prices. However, in a similar tone with ADB, the report adds that the Indian economy may register 6.9 percent in both 2024-25 and 2025-26 fiscal years. It points out to India’s strong consumption growth and capital expenditure.

Meanwhile, data released by the RBI last week shows that net financial savings of Indian households collapsed to just 5.1 percent of GDP. This is the lowest level in 47 years since FY77. The Finance Minister said that this data is "not a sign of distress”. In contrast, experts point out that on the back of likely nominal GDP growth of only 8 percent in the current financial year, either consumption growth or household investments may weaken substantially.

There is no dearth reports saying that this is India’s decade. Sustained domestic demand, focus on capital expenditure by government, low core inflation, recovery in private investment – all these signal to the economy’s growth potential, but concerns are still there, particularly in the form of global slowdown, weak monsoon, slowing exports and the upcoming general elections. India’s growth story may be strong in the long term, but for a better near-term picture the government must continue its efforts.