Goldman Sachs cuts India’s GDP growth forecast for 2024-25: Here’s why
Source: IANS |
Goldman Sachs, the US-based investment firm, has lowered its projection of India’s GDP (Gross domestic product) by 20 basic points each for 2024 and 2025 following a contraction in the Central government’s expenditure.
It now expects the nation’s GDP growth to expand at 6.7% in calendar 2024 and 6.4% in 2025. The current year’s downgrade comes after a significant drop in government spending during the April-June quarter that coincided with the general elections. The government expenditure contracted by 35% year-on-year (YoY) during that quarter.
As per the bank, the Central government’s commitment to bring down the fiscal deficit below 4.5% of GDP is the key factor contributing to India’s reduced growth forecast for next year. Another key factor is the anticipated slowdown in real consumption growth. Due to RBI’s stricter regulations on unsecured lending by banks, the household credit is also expected to slow down, which will lead to lower consumer spending and hamper India’s economic growth.
However, Goldman anticipates that RBI will start its easing cycle in December 2024 and an easier monetary policy might help in balancing out some of the drag on GDP growth next year.
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