FY24 viewed with cautious optimism by economists

India's GDP growth of 6.1 percent in the fourth quarter of FY23 took economists by surprise, primarily due to the unexpected expansion in agriculture and manufacturing sectors. Forecasts for the quarter ranged from 4.4 percent to 5.5 percent, showcasing a wide disparity. However, this divergence hasn't prompted economists to revise their forecasts for FY24 just yet.

DK Joshi, the chief economist at CRISIL, has maintained the estimate of 6 percent growth for FY24, albeit with a higher bias. He expressed concerns about the adverse impact of the global environment on India's exports, particularly affecting sectors linked to exports such as textiles. While service exports have shown resilience, the bulk of India's exports, comprising goods exports, are expected to face challenges.

Joshi emphasized that despite the global volatility, India's projected growth of 6 percent remains the highest among G20 nations, indicating decent growth. However, the performance of the monsoon season could pose a downside risk, especially for rural and agricultural growth. Achieving a growth rate exceeding 4 percent in agriculture might prove challenging if rainfall is unevenly distributed, presenting another economic risk for the current fiscal year.

Surjit Bhalla, a former executive director of the International Monetary Fund and a former member of the Economic Advisory Council to the Prime Minister, holds an optimistic outlook for the world economy and believes that India will benefit from higher-than-expected global growth. Disagreeing with forecasters about a global recession, Bhalla stated that there is little evidence to support such claims. While Germany has experienced a technical recession, other economies are displaying signs of recovery despite a slowdown in the United States. Bhalla highlighted that one factor benefiting India is the expectation of higher-than-anticipated global growth.

However, Bhalla cautioned that the only potential shock capable of impacting the Indian economy would be a flare-up in geopolitical tensions.