“A somewhat lower fiscal impulse to growth (as the central government pursues fiscal consolidation) should also weigh on growth,” said ET-Crisil India Progress Report, released here at the event on Wednesday.
According to report, inflation based on the consumer price index (CPI) is expected to ease to 4.5% on average in FY25 from 5.4% last year, driven by lower food inflation. The agency, however, called out weather and geopolitical uncertainties as key risks to its growth and inflation forecasts.
“Although kharif sowing is higher this year, the impact of excess and unseasonal rains needs to be ascertained. An adverse weather event through the rest of this fiscal remains a constant risk to food inflation and agriculture income,” it said.
The report also pointed out that “any further escalation in geopolitical tensions could constrain supply chains, disturb trade and push up oil prices, impacting inflation and sending input costs soaring.” It expects India’s current account deficit to rise to 1% of GDP this fiscal from 0.7% in FY24, though it will remain in the safe zone on the back of robust services export and healthy remittance inflows.According to the report, the Indian economy-in the medium term-could grow by 6.7% on average between fiscal 2025 and 2031, and touch the $7 trillion mark. This would be similar to the 6.6% growth seen in the pre-pandemic decade, driven by capex push, and surge in productivity.However, the contribution of labour is expected to remain low during the period.
Content Source: economictimes.indiatimes.com