Goldman Sachs upgrades India's 2024 GDP growth forecast to 6.7%

Goldman Sachs has revised India's GDP (gross domestic product) growth forecast upward for calendar year 2024 by 10 basis points (bps) to 6.7%.

The latest note by the global investment banking, securities, and investment management company says there's an extra space for fiscal spending by the Centre, which will ensure growth momentum stays.

Goldman Sachs says the RBI may cut the key lending rates but not before Q3 of FY 2024-25 as the Centre would want to analyse how monsoons and karif crops progress. It has predicted that overall, the RBI could look at a 75 basis points rate cut, with 25 bps in Q3 and Q4 alone.

On inflation, Goldman Sachs says retail inflation could remain in the range of 4-4.5% in the second half of the calendar year 2023-24.

The government will announce the fourth quarter (January-March) GDP numbers and the provisional forecast for FY2023-24 on May 31, 2024. Various financial institutions including ICRA and India Research have pegged Q4 GDP growth at 6.7%-7%.

ICRA on May 21, 2024, said India's GDP growth on a year-on-year basis is projected to dip to a four-quarter low of 6.7% in Q4 FY2024 from 8.4% in Q3. Further, growth in the gross value added (GVA) is estimated to ease to 5.7% in Q4 FY2024 from 6.5% in Q3 FY2024, driven by the industrial and services sectors.

India Ratings and Research (Ind-Ra) expected the country's GDP to grow at 6.2% in Q4 and 6.9%-7% in the full fiscal year 2024-25.

Additionally, the United Nations this month raised its growth forecast for India's economy in 2024 on robust public investment and strong private consumption. It said India is expected to see 6.9% growth in 2024 and 6.6% in 2025.

According to the International Monetary Fund's (IMF) World Economic Outlook for April 2024, India's economic growth is projected to remain strong at 6.8% in 2024-25 and 6.5% in 2025-26.

The RBI’s latest monthly bulletin for April 2024 suggests that India’s GDP growth is likely to remain close to 7.5% in the first quarter of the current fiscal year on high-frequency indicators pointing to a quickening of the momentum of aggregate demand.

According to RBI, E-way bills grew by 14.5% in April. Toll collections increased by 8.6% in April 2024. Automobile sales increased by 25.4% in April led by two-wheelers and three-wheelers, whereas passenger vehicles recorded the highest-ever monthly sales. Average daily petroleum consumption increased by 6.1% in April 2024, led by motor spirit (petrol) and aviation turbine fuel.

It says for the first time in at least two years, rural demand for fast-moving consumer goods (FMCG) has outpaced urban markets—in the quarter gone by.