Economic Growth Expectations and Expectation:
- To rebound because housebound demand continues to build
- July–Sept. 2024 Q-Quarterly Growth had dropped back to a fresh seven-quarter trough to 5.4 per cent.
- Fourth Yearly fall for FY 25, growth was estimated at a four year-low of 6.4%.
Prime movers and drivers of India’s economy to keep on recovering and growth continue unabated :
- Infrastructure expenditure of govt (Govt. public Capital Expenditure):
- Will also spur economy
- Rural Demand:
- Good rural demand, especially with a brighter agriculture prospects.
Challenges to Growth:
- Manufacturing input cost inflation is increasing. Weather challenge has now been added with global headwinds.
- Private capex stayed soft and was a drag to growth.
- Inflation
- Food inflation eased back to 7.7% in December 2024. However, the prices of major products were high.
- Headline CPI inflation softened to a four-month low of 5.2% in December.
- Monetary Policy and Rate Cut:
- Rates are steady for the last two years after a 250 basis points rate hike between May 2022 and February 2023.
Key Points
- Public Capex is likely to be the growth driver.
- The slowdown is likely to happen in the second half of FY25 on account of unfavorable factors.
- Gross fixed investment and manufacturing in GVA have been the biggest drags to growth.
- That the brightening spot in India’s economy is private final consumption.
Source: Business Standard
