India's GDP Growth Seen At 6% in FY24, Says Crisil

India's real GDP is expected to grow 6% in the next financial year, according to rating agency Crisil.

Consumer inflation in India is expected to moderate to 5% on average in FY24 from 6.8% in FY23, the credit rating agency said. But there are still high risks to inflation because of the ongoing heat wave and the chance of an El Nino warming event.

"What is also good to see is the increasing sustainability footprint of capex. At present, nearly 9% of the infrastructure and industrial capex is green. We see this number rising to 15% by fiscal 2027," said Amish Mehta, managing director and chief executive officer of Crisil Ltd, in the statement.

In the medium term, he said, growth is also likely to be driven by increased government spending on capital investments and fresh private spending on capital investments. 

The private operating margin area is also expected to improve by 120–170 basis points in FY24, aided by three factors, viz., benign commodity prices, the full effect of price hikes in FY23 playing out, and volume growth, Crisil said.

While India's current account deficit is expected to narrow to 2.4% of GDP ($88 billion) in the next fiscal from an estimated 3% of GDP ($100 billion) this fiscal, its financing "may face challenges as foreign portfolio flows remain volatile and external commercial borrowings are less attractive", said Dharmakirti Joshi, chief economist at Crisil.

India's merchandise exports are also expected to grow 2-4% in FY24 after an estimated 5-7% increase in FY23, the agency said.