We expect the Indian economy to grow at 6.9% in FY25, slowing slightly from the 7.3% growth

Mr. Indranil Pan

Co-chair, Economic Policy Research & Development Committee,

Bombay Chamber & Chief Economist, Yes Bank

In conversation with the Bombay Chamber, Mr Indranil Pan, Chief Economist, Yes Bank, gives his insights into the economic outlook for India in 2024 and the factors influencing investment decisions in the current business climate.

What is your outlook on the Indian economy in 2024, considering global dynamics? What key factors do you think will drive or hinder growth?

  • The Indian economy has exhibited resilience in the face of tight domestic financial conditions and also global slowdown. Going ahead we expect the domestic economy to slow as global growth slowdown becomes more pervasive and as the RBI continues to maintain a tight leash on monetary policy, leading to a fuller passthrough of rates. We expect the Indian economy to grow at 6.9% in FY25, slowing slightly from the 7.3% growth (as per the government’s advance estimates).

How do you assess the current business environment in India and what factors do you anticipate influencing investment decisions in 2024? Any specific sectors of interest or concern?

  • The balance sheets of the companies as also the banks are robust, thereby indicating a good base for private investment activity to pick up. Sectors that are linked to the government’s capex cycle are likely to continue to do well, given our expectation of continued support from the government towards infrastructure building. However, sectors linked to consumption – especially rural consumption may continue to lag as rural income growth suffers on account of low agricultural production and also muted growth in real wages.

How do you see government policies shaping the business landscape in 2024? Are there particular policy measures crucial for fostering a favorable environment for businesses?

  • There is possibly little that the government can do now to boost the business landscape – most of the policies have been undertaken but will take time to yield results – for instance the PLI scheme. Further, balance sheets of companies and banks are doing well and hence, the government will have to wait patiently for the “crowding in” of the government capex push to take hold. Importantly, the government will have to find ways to raise the outlays for health, education and R&D to ensure gains in productivity for the future.
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