The slowdown in economic growth in the second half of 2023-24 projected by the National Statistical Office (NSO) is expected to persist in the coming financial year, rating firm Crisil said on Monday. Real GDP grew 7.7% in the first half of the year, and the NSO anticipates annual growth to hit 7.3%.
“The first advance estimates bake in a slowdown in the second half relative to the first half of this fiscal. The latter half slowdown has been driven by weaker private consumption, especially rural demand, and the bite of rising interest rates. We expect the slowdown to continue next fiscal,” Crisil economists said.
The key reasons cited for further softening in economic momentum include weaker global growth — expected to ease to 2.8% in 2024 from 3.3% in 2023 — and high interest rates whose transmission is still playing out, hurting domestic demand.
“Services growth has begun slowing. Slowing consumption spending will further drag growth next fiscal... As government moves a step further to reducing fiscal deficit in upcoming budget; it may need to reduce capital expenditure next year. This will take some steam off robust investment growth,” the Crisil team noted.
