GDP May Surpass Estimates

The recent uptick in most macro-indicators point to a spurt in economic expansion that may beat forecast and expectations. While IMF has revised India’s GDP growth to 6.3%, RBI is sticking to its forecast of 6.5%

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The Indian economy is most likely to spring a surprise on the upside with the GDP growth beating the Reserve Bank of India’s forecast of 6.5% for the fiscal 2023-24. This is mirrored in the recent upward revision in India’s GDP growth by IMF despite lowering the growth projections for the world economy for the current fiscal. To me, the base case scenario for India’s GDP topping the 6.5% mark looks plausible since the domestic macro-economic constructs are looking upbeat. This is borne out of the fact that the GDP expansion in the past few quarters remains well above the historic trend line. And inflation easing consistently monthon-month adds credence to this belief. Though higher-for-longer interest rate inflates the cost of capital, the balance sheets of both financial and non-financial corporates never looked healthier than now is another reason for my optimism.