OPEC stated in a monthly report that the strong growth seen in India during 4Q23 appears to be carrying over into 2024. India's economy grew by 8.4%, y-o-y, in 4Q23, with services expanding by 7.0%, y-o-y, and manufacturing by 11.6%, y-o-y. Industrial production also maintained momentum into 2024, with a 5.7%, y-o-y, increase in February and 4.1% growth in January, following a 4.3%, y-o-y, rise in December. Amidst these positive trends, consumer confidence rose to 98.5 in March, up from 95.1 in January. The ongoing election cycle is expected to boost spending, especially in rural areas. Combined with more efficient delivery mechanisms, the impact of election- related spending is expected to be significant. The Reserve Bank of India (RBI) held the key repo rate steady at 6.5% in April.
According to OPEC, with inflation trending toward the target rate of 4%, there is an increasing possibility that the RBI may ease monetary policy, although food inflation continues to be a concern. With robust growth momentum projected to continue, manufacturing is expected to be a key driver of economic expansion in 2024. Government support policies, particularly through Production Linked Incentive (PLI) schemes, are likely to sustain growth in industrial production and manufacturing. This will be especially apparent in key sectors such as electronics, pharmaceuticals and steel, which are the major focus areas of PLI schemes. The growth forecast for India in 2024 remains at 6.6%, unchanged from the previous month's report. Continued support for manufacturing and an anticipated recovery in the agricultural sector is likely to play a significant role in sustaining this growth. For 2025, the growth rate is expected to decelerate slightly but remain robust at 6.3%.
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