Informist, Friday, May 3, 2024

MUMBAI - The Organization for Economic Cooperation and Development has raised its forecast for India's GDP growth in the current financial year ending March by 40 basis points to 6.6% due to stronger investment and improving business confidence. It has also raised the country's GDP growth forecast for 2025-26 (Apr-Mar) by 10 bps to 6.6%.

Fiscal consolidation, while necessary, will weigh on public investment, and be offset only partially by stronger private investment as business confidence improves, OECD said in its latest economic outlook released on Thursday. "Stronger external demand will bring an improvement in export growth. GDP growth will remain in line with the 20-year average in 2025-26."

Despite the upward revision, the OECD's GDP growth forecasts for India for the current financial year and 2025-26 are lower than the Reserve Bank of India's estimate of 7.0% for both years. India's economy is estimated to have grown 7.6% in 2023-24, according to the government's second advance estimate. For the financial year ended March, OECD's growth projection is 7.8%.

Meanwhile, the intergovernmental organisation said it expects the Monetary Policy Committee to opt for a first rate cut in late 2024, with cumulative cuts of up to 125 basis points implemented before March 2026. "The Reserve Bank of India will only switch the stance to neutral during 2025." This is assuming a normal monsoon season and no other supply shocks that may de-anchor inflation expectations, it said. End

Reported by Nishat Anjum

Edited by Avishek Dutta

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