The post-pandemic recovery hit by inflation and a global recession spilling over into India's economy is bound to affect the country's growth. Despite the impact of interest rates hiked by the US Federal Reserve, the Reserve Bank of India has tried to soften the blow for ensuring business growth. Which is why India is expected to be the fastest growing among seven emerging economies, even though its GDP growth will slow down to 6.6 per cent in FY24 from 6.9 per cent according to the World Bank.
Further dip expected in years to come
As for FY25, the growth rate will dip further to 6.1 per cent because of uncertainty on a global scale, that will affect investments into and exports out of India. The government's efforts to preserve business expansion and higher spending in infrastructure projects, will play a role in the growth. Strong private consumption had already driven up GDP growth in the first half of FY23 to more than 9 per cent.
Government policies cushioned the blow
But the goods trade deficit has grown two-fold since 2019, as crude petroleum and petroleum products and other commodities such as ores and minerals playing a role in increasing the gap.
Among measures to slow down the Rupee's free fall, the government curbed excess exchange rate volatility.
The forecast isn't expcted to affect monetary and fiscal policy in India as much as the rest of the region, since it has enough policy buffers to back up economic recovery.
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