Indian economy to grow at average 6.7% per annum until FY31: CRISIL

The organisation projected the Indian economy to grow at an average rate of 6.7 per cent per annum until the end of this decade, i.e., between fiscals 2023-24 and 2030-31, a notch above the pre-pandemic decadal average of 6.6 per cent.

The key contributor to this trend will be capital. This is a result of the investment-driven strategy of the government to deal with the scarring from the pandemic, when the private sector was investment shy.

The government increased capital expenditure significantly to support the build-up of infrastructure and offered interest-free loans to states to bolster their own investment efforts, CRISIL, a subsidiary of S&P Global Ratings, noted.

The 5.7-per cent inflation print in India in December last year was driven solely by volatile vegetable prices and stubborn food grain inflation. However, it will keep the central bank cautious on the rate front as it eyes the 4-per cent target, it noted in a release.

The continued softening of core inflation and the deflation in fuel prices bring only two cheers. Given food has a substantial weight in the consumer price index (CPI) basket, the persistence of high inflation in this category keeps the risk of its transmission to non-food components alive, it said.

Global growth seems to be moderating as gross domestic product (GDP) contracted in some key advanced economies in the third quarter of last year.

While GDP contracted in Japan (minus 2.9 per cent annualised), the euro zone (minus 0.1 per cent) and the United Kingdom (minus 0.1 per cent), the US economy remained resilient, growing at an annualised 4.9 per cent compared with 2.2 per cent in the previous quarter.

Central banks in many advanced economies stayed pat with their interest rates during their latest policy meetings. Key central banks have raised rates by 400-525 basis points in the current interest rate cycle.

Although inflation remains above their respective targets, it has moderated significantly over the previous year and growth seems to be slowing, CRISIL added.

Fibre2Fashion News Desk (DS)