UBS; India's real GDP growth expected to moderate to ____

Indian Economy - General Knowledge Questions

UBS; India's real GDP growth expected to moderate to _____ in FY25 and FY26

7% and 6.8%

7% and 6.5%

6.7% and 6.1%

6.9% and 5.7%

Correct Answer : 7% and 6.8%

UBS anticipates a moderation in India’s real GDP growth for fiscal years 2025 and 2026, projecting rates of 7% and 6.8%, respectively. Despite this, India is expected to maintain its position as one of the fastest-growing global economies. The report highlights the continuation of growth momentum in the first three quarters of fiscal year 2024, driven by cyclical recovery and structural improvements.

GDP Growth Projection

* Real GDP growth expected to moderate to 7% and 6.8% in FY25 and FY26 respectively.
* Positive surprises noted in India’s GDP growth, averaging above 8% in the first three quarters of FY2024.
* Expectation of moderation attributed to global factors such as weaker growth and local factors like softness in public capex.

Sector-wise Analysis :

* Anticipated moderation in investment-led growth due to lower public capex.
* Gradual recovery expected in consumption growth driven by rural growth recovery, relying on expectations of a normal monsoon as projected by IMD.

Equity Market Outlook :

* Expectation of near-term volatility in the Indian equity market due to elevated geopolitical and economic risks.
* Manageable downside risks amid supportive domestic macro and micro environment.
* Reversal of rate cycle could provide valuation support as equity risk premium falls.
* Investors advised to utilize steep market corrections as buying opportunities, favoring domestic economy linked sectors for long-term structural growth opportunities.

Published On : March 9, 2024

Recent Updates in Indian Economy - General Knowledge Questions

Q .

NIPFP Forecasts India’s FY25 GDP Growth at____.

5.8%

6.3%

6.7%

7.1%

Correct Answer : 7.1%

The National Institute of Public Finance and Policy (NIPFP) predicts India’s GDP growth for the fiscal year 2024-25 to be 7.1%. Utilizing high-frequency models, NIPFP underscores the government’s fiscal consolidation efforts, emphasizing tax buoyancy and compression of revenue expenditure.

States’ Capex Growth :

In the fiscal year 2023-24, states witness robust capital expenditure (capex) growth, attributed to substantial transfers from the central government. This highlights the effective utilization of resources at the state level, contributing to economic expansion.

Divergent Projections :

While NIPFP’s forecast stands at 7.1%, other entities such as the Asian Development Bank (ADB) and Fitch Ratings estimate a growth rate of 7%. In contrast, the International Monetary Fund (IMF), S&P Global Ratings, and Morgan Stanley project a slightly lower growth rate of 6.8% for FY25, indicating varying perspectives on India’s economic trajectory.

IMF’s Appreciation of India’s Fiscal Discipline :

The International Monetary Fund (IMF) commends India for maintaining fiscal discipline, particularly noteworthy in an election year. Emphasizing the significance of sound macro fundamentals, IMF’s Director for Asia and Pacific Department, Krishna Srinivasan, lauds India’s steady economic performance, projecting growth at 6.8% for 2024-25, driven by private consumption and public investment.

Published On : April 27, 2024

Category : Indian Economy

Q .

What is the revised GDP growth forecast for India for 2024-25 according to the IMF?

6.8%

7.1%

7.8%

8.2%

Correct Answer : 6.8%

The International Monetary Fund (IMF) on Tuesday (16th April 2024) raised India’s GDP growth projection for 2024-25 by 30 basis points to 6.8 per cent in its update to the World Economic Outlook (WEO), citing buoyant domestic demand. However, the fund’s estimate is below the 7 per cent growth projection by the government.

“Growth in India is projected to remain strong at 6.8 per cent in 2024 (FY25) and 6.5 per cent in 2025 (FY26), with the robustness reflecting continuing strength in domestic demand and a rising working-age population,” the IMF said in its report. For India, according to the report, data and forecasts are presented on a financial year basis.

For FY24, the IMF raised India’s GDP growth projection to 7.8 per cent, compared to 6.7 per cent in its January report. For FY26, the IMF expects the country’s economic growth to slow down slightly to 6.5 per cent -- the same as projected in its January update.

According to the second advance estimates by the National Statistical Office, the growth rate of GDP during 2023-24 was estimated at 7.6 per cent, compared to a growth rate of 7 per cent in 2022-23.

Rating agencies, including Fitch and Barclays, recently revised India’s GDP growth projection for FY24 to 7.8 per cent due to strong domestic demand and persistent growth in business and consumer confidence levels.

The finance ministry in its last monthly economic report (for February) said that strong growth accompanied by stable inflation and external account, and progressive employment outlook would help the Indian economy close FY24 on a positive note. “There are headwinds like indications of hardening crude oil prices and global supply chain bottlenecks to trade. Nonetheless, India, on the whole, looks forward to a bright outlook for FY25,” it said.

On inflation, the fund projected India’s consumer price inflation declining from an average of 5.4 per cent in FY24 to 4.6 per cent in FY25, and further to 4.2 per cent in FY26..

Source : Business Standard

Published On : April 18, 2024

Category : Indian Economy

Q .

What was the inflation rate in India's Wholesale Price Index (WPI) for March 2024?

0.92%

0.78%

0.53%

0.41%

Correct Answer : 0.53%

March 2024 witnessed a positive inflation rate of 0.53% in India’s Wholesale Price Index (WPI) compared to March 2023. This inflation was primarily attributed to increased prices in food articles, electricity, crude petroleum & natural gas, machinery & equipment, and other manufacturing sectors.

Month-over-Month Change in Major Groups of WPI :

1. Primary Articles (Weight 22.62%) :

* The Primary Articles group’s index surged by 0.94% to 183.1 in March 2024. Significant price increases were seen in crude petroleum & natural gas, food articles, minerals, and non-food articles.

2. Fuel & Power (Weight 13.15%) :

* The Fuel & Power group’s index rose marginally by 0.06% to 155.2 in March 2024. While electricity and mineral oils saw price increases, coal prices declined.

3. Manufactured Products (Weight 64.23%) :

* The Manufactured Products group index increased by 0.21% to 140.1 in March 2024. Notable price increases were observed in food products, motor vehicles, trailers and semi-trailers, rubber and plastics products, and other manufacturing sectors.

4. WPI Food Index (Weight 24.38%) :

* The WPI Food Index, comprising food articles from Primary Articles and food products from Manufactured Products, rose from 178.3 in February 2024 to 180.1 in March 2024. This led to an increase in the inflation rate from 4.09% to 4.65%.

Published On : April 16, 2024

Category : Indian Economy