Global investment bank Morgan Stanley has raised India's growth rate for the entire financial year after strong growth in the April-June quarter of the Indian financial year 2023-24.
Morgan Stanley has now estimated the growth rate to be 6.4 percent for the entire financial year. Earlier, Morgan Stanley had said that the growth rate would be 6.2 percent.
Growth rate increased due to strong domestic demand:
- According to the investment bank, the growth rate estimate has been revised due to strong domestic demand. India's gross domestic product (GDP) growth rate in April-June 2023 has been 7.8 percent, which is higher than Morgan Stanley's estimate of 7.4 percent.
Highlights of the report:
- This growth rate is higher than our estimates, but in line with consensus expectations, according to the report. This sharp increase in growth rate has been due to higher than expected growth in private consumption.
- Citing GST collections, credit growth and GDP index, the report said the strong momentum in domestic demand conditions is visible in the GDP data.
- According to the report, the Indian economy will remain flexible in this financial year.
- A strong balance sheet across the economy and proactive supply-side responses by the government are likely to provide a secure base for the multi-year growth cycle.
- The report expresses concern over weak global growth, global commodity price trends and extraordinary weather conditions.
Apart from Morgan Stanley, Moody's and Nomura also increased India's economic growth forecast:
- A day after the data of GDP growth rate of 7.8% in the first quarter of the financial year 2024 came, some economic forecasting agencies have increased the estimates of India's economic growth, which include Morgan Stanley and Moody's Nomura.
- Nomura Research raised its growth forecast for FY2024 to 5.9% from its earlier estimate of 5.5%.
- According to Nomura Research, there are signs of sluggish domestic demand due to weak monsoon, increased food inflation, reduced government capital expenditure and sluggish global growth, which will lead to sluggish economic growth in the second half of 2023.
- Nomura has reduced GDP growth forecast for FY25 to 5.6 per cent from 6.5 per cent.