India's GDP likely to grow at 6.2% in FY24, says Morgan Stanley

Earlier, the Budget for FY24 had projected nominal GDP growth at 10.5 per cent, as the centre increased the capital investment outlay steeply for the third year in a row by 33 per cent to Rs 10 trn

India’s gross domestic product (GDP) is expected to grow at 6.2 per cent in FY24 as drivers of domestic demand remain intact amid fears of an impending slowdown, Morgan Stanley said in a research report released on Thursday. 

The report said that as the economy fully reopened in 2022 leading to a cyclical recovery in consumption, pickup in private capex with healthy balance sheets in the private corporate and financial sector, and acceleration in government capital spending, the world’s fifth largest economy will breach the consensus GDP growth figure of 6 per cent.

“We believe that the key for sustained domestic demand is a pickup in capex, which will help create more jobs, thus leading to a virtuous cycle of more jobs leading to higher income, which will lead to higher saving, resulting in higher investment”, the report notes.

Earlier, the Union Budget for FY24 had projected nominal GDP growth at 10.5 per cent, as the centre increased the capital investment outlay steeply for the third year in a row by 33 per cent to Rs 10 trillion. The Economic Survey for 2022-23 projected that India would witness a growth between 6-6.8 per cent in FY24, depending on the trajectory of economic and geo-political developments globally.

The report also mentioned that the incoming high-frequency data on indicators like private consumption and investment reflected a moderation in the December quarter driven by base effect and shift in the festival calendar rather than a slowdown.

“Indeed, incoming data on high-frequency indicators have gained momentum both in YoY (year-on-year) and MoM (month-on-month) terms in January. The trend is thus encouraging after these indicators exhibited mixed signs, with some of them slowing in YoY terms in Q3 after peaking in Q2, driven by the impact of shift in festival dates on growth rates”, the report notes.