Economists flag slowdown in rural India; FY24 GDP growth seen at 6.1-6.2%
Indranil Pan, Chief Economist at Yes Bank says India's rural economy is witnessing a significant slowdown and he would pencil in a conservative gross domestic product (GDP) growth at 6.1-6.2% for the year. Sakshi Gupta, Deputy Vice President and Senior Economist at HDFC Bank retains her projections at 6.3% for the year.
Indranil Pan, Chief Economist at Yes Bank says India's rural economy is witnessing a significant slowdown and he would pencil in a conservative gross domestic product (GDP) growth at 6.1-6.2% for the year.
"The upper end of the income pyramid continues to spend quite significantly and that is holding up the consumption demand to an extent. The lower end is surely suffering, and the rural economy is possibly one of the worst hit," Pan remarked.
The International Monetary Fund (IMF) has increased its India GDP projections by 20 basis points (bps) to 6.3%, while the Reserve Bank of India (RBI) has a 6.5% forecast for the year.
Even though some of the country's top information technology (IT) companies, including Tata Consultancy Services (TCS), Infosys, HCLTech, and Wipro, have reported good deal pipelines, the overall atmosphere suggests that the deals are relatively lower in value. This, he argued, will affect consumption behaviour in the near future.
He pointed out that the fast-moving consumer goods (FMCG) sector has already indicated lower volume growth, reflecting a lack of balanced growth expectations post-COVID-19.
Sakshi Gupta, Deputy Vice President and Senior Economist at HDFC Bank, agrees with Pan on a 6.4% growth rate for the next year.
She noted that the formal sector employment data reveals a mixed hiring landscape. While urban unemployment rates are increasing, there has been a slight moderation in the unemployment rate in rural areas.
Gupta prefers to retain a 6.3% target for the year. She anticipates tighter financial conditions in the future, indicating that the latter part of the year may see a decrease in economic growth compared to the first half.
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(Edited by : Shweta Mungre)
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