S&P Global Ratings has retained its growth forecasts for India at 6% for the financial year 2023-24.
India is projected to be the fastest growing major economy in Asia Pacific. It is expected to surpass China’s projected growth rate of 5.5% in FY24.
The strong growth prospects for India can be attributed to several factors. These factors include a robust recovery in domestic demand, supported by strong job growth and rising wages.
India also benefits from a favorable external environment, with strong global growth and rising commodity prices. The country has made progress on structural reforms such as the Goods and Services Tax (GST) and the Insolvency and Bankruptcy Code (IBC).
However, there are downside risks to India’s growth outlook. S&P has highlighted concerns over the ongoing war in Ukraine. This conflict could lead to higher commodity prices. Additionally, it has the potential to disrupt global supply chains.
A potential slowdown in China could also have a negative impact on India’s exports. Furthermore, a tightening of global financial conditions could pose challenges for Indian companies in raising capital.
Despite these risks, S&P maintains a positive growth forecast for India. It is important to monitor these downside risks as they have the potential to affect the country’s economic performance in the coming years.
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