Economic growth of India is likely to slow down in this financial year at 6 per cent from 7.2 per cent in FY23 due to headwinds in the global economy.

The National Institute of Public Finance and Policy (NIPFP) in a mid-year macroeconomic review said, “The Q1 industrial growth remained buoyant, especially construction and consumer non-durables; however, the agricultural growth was muted and the services growth was sluggish.”

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The retail inflation is also expected to remain below the 6 per cent limit at 5.1 per cent in this financial year, due to the lagged effect of monetary policy transmission and broad-based decline in food, energy, and core inflation, it added.

Earlier, a report by S&P Global said the Indian economy is expected to grow at an average rate of 6.7 per cent between fiscal 2023-24 (FY24) to fiscal 2030-2031 (FY31).

It also said India’s gross domestic product (GDP) is likely to rise to $6.7 trillion to FY31 from $3.4 trillion in FY23.

The Reserve Bank of India (RBI) in its Monetary Policy Committee (MPC) meeting kept the real GDP forecast for FY24 unchanged at 6.5 per cent. The decision was taken on the back of higher rural and urban growth, increased investment activity, and government’s plan of higher capital expenditure.

The CPI inflation is projected at 5.4 per cent for 2023-24, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent, with risks evenly balanced. CPI inflation for Q1:2024- 25 is projected at 5.2 per cent.

While the real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8.0 per cent; Q2 at 6.5 per cent; Q3 at 6.0 per cent; and Q4 at 5.7 per cent, with risks broadly balanced. Real GDP growth for Q1:2024-25 is projected at 6.6 per cent.