India likely to report higher GDP growth estimates

India is likely to project higher economic growth estimates of around 7% for the 2023/24 fiscal year ending in March, compared with earlier government forecasts when the National Statistical Office releases its first advance GDP estimates.

An increased annual gross domestic product estimate is widely expected after the Reserve Bank of India (RBI) revised its growth forecast last month to 7% for the current fiscal year from an earlier estimate of 6.5%.

The advance estimates of GDP, which go under six revisions over time, will be released on Friday at 1200 GMT.

The central bank’s revised growth forecast of 7% for 2023/24 was a “conservative estimate” considering robust growth reflected in high-frequency indicators data for October and November, Michael Patra, RBI’s deputy governor, said last month.

Prime Minister Narendra Modi has increased state spending on infrastructure projects to bolster economic growth amid sluggish consumer spending, which, analysts said, will likely help him win a third term in the national election scheduled before May.

The Indian economy grew faster than expected, 7.6% year-on-year in the September quarter after growing 7.8% in the previous quarter, prompting many private economists to revise their yearly estimates upwardly.

Among others, S&P Global Ratings expects India to remain the fastest-growing major economy for the next three years, setting it to become the world’s third-largest economy by 2030.

S&P expects India, currently the world’s fifth-largest economy, to grow at 6.4% this fiscal year and estimates growth will pick up to 7% by fiscal year 2027.

In contrast, it expects China’s growth to slow to 4.6% by 2026 from an estimated 5.4% this year.

Economists said the RBI’s monetary policy committee (MPC) is unlikely to cut the benchmark policy rate of 6.5% for the next few quarters amid the risk of a spike in food inflation in the election year.

India is likely to project higher economic growth estimates of around 7% for the 2023/24 fiscal year ending in March, compared with earlier government forecasts when the National Statistical Office releases its first advance GDP estimates.

An increased annual gross domestic product estimate is widely expected after the Reserve Bank of India (RBI) revised its growth forecast last month to 7% for the current fiscal year from an earlier estimate of 6.5%.

The advance estimates of GDP, which go under six revisions over time, will be released on Friday at 1200 GMT.

The central bank’s revised growth forecast of 7% for 2023/24 was a “conservative estimate” considering robust growth reflected in high-frequency indicators data for October and November, Michael Patra, RBI’s deputy governor, said last month.

Prime Minister Narendra Modi has increased state spending on infrastructure projects to bolster economic growth amid sluggish consumer spending, which, analysts said, will likely help him win a third term in the national election scheduled before May.

The Indian economy grew faster than expected, 7.6% year-on-year in the September quarter after growing 7.8% in the previous quarter, prompting many private economists to revise their yearly estimates upwardly.

Among others, S&P Global Ratings expects India to remain the fastest-growing major economy for the next three years, setting it to become the world’s third-largest economy by 2030.

S&P expects India, currently the world’s fifth-largest economy, to grow at 6.4% this fiscal year and estimates growth will pick up to 7% by fiscal year 2027.

In contrast, it expects China’s growth to slow to 4.6% by 2026 from an estimated 5.4% this year.

Economists said the RBI’s monetary policy committee (MPC) is unlikely to cut the benchmark policy rate of 6.5% for the next few quarters amid the risk of a spike in food inflation in the election year.