Tale of two halves: Goldman sees GDP powered by govt, pvt sector

Investment bank and financial services major Goldman Sachs predicted a higher 6.5% growth in gross domestic product (GDP) in FY25, compared to a more sedate 6.2% in FY24. That is more or less in line with the trend that other agencies have also predicted.

- Rhik Kundu

In calendar year 2024 (CY24), economic growth “is likely to be a tale of two halves", Goldman Sachs said in a report released on Monday, titled India 2024 Outlook. While government spending will drive growth in the first half, private investment will accelerate after the general election to become the key driver of growth.

In the first half of CY24, the bank expects subsidies and transfer payments to drive growth as the country heads into general elections in May. “Post-elections, we expect investment growth to re-accelerate, especially from the private side. While we expect the government to continue its focus on capital spending, given the medium-term fiscal consolidation path, the rate of growth in capex will likely decrease from the next fiscal year," it added.

According to Goldman Sachs, risks around India’s growth outlook are evenly balanced with the main domestic risk emanating from political uncertainty with elections in May 2024.