The key macro drivers remain healthy and India's GDP growth is likely to move closer to the trend growth of 6.5-7 per cent this fiscal, said a Crisil Insight report on Monday. Trend GDP growth is the average sustainable rate of economic growth over time.
Private consumption growth in the country has fared better than last year in the first half of the current fiscal (FY25).
"While investment growth has moderated relative to last year, its share of GDP remains higher than the pre-pandemic decade," the report mentioned.
Technical factors contributed to an above-trend GDP growth last year. They are expected to have a moderating effect on GDP growth this current fiscal as they normalise.
"GDP growth had averaged 6.6 per cent in the pre-pandemic decade. This fiscal is likely to see GDP growth move closer to trend growth of 6.5-7 per cent," says the report.
The key macro drivers of growth are still healthy. Private consumption has grown 6.7 per cent on average in the first half of this fiscal, as against 4.1 per cent in the corresponding period last year. Its share in GDP at 56.3 per cent this fiscal has been higher than 56.1 per cent in the pre-pandemic decade.
Even WPI inflation is normalizing. WPI declined to -0.7 per cent in the last fiscal. WPI inflation averaged 2.7 percent this fiscal and thus closer to its pre-pandemic average of 5 years of 3.2 per cent.
India's annual rate of inflation based on WPI for November eased to 1.89 per cent compared with 2.36 per cent in October as food prices rose at a slower pace during the month when fresh crop began entering the market.
"We expect improving consumption demand to drive growth momentum this fiscal. In particular, agriculture and rural demand are poised to improve after a healthy monsoon. This means growth will be more balanced this fiscal, even if it is lower than last year," said the Crisil report.
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