The state of the Indian economy is one of the biggest aspects to consider ahead of the Budget announcement on February 1. While expectations are fairly muted, given that this is an Interim Budget, economists expect India to remain one of the fastest-growing major economies in 2024.
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Tanvee Gupta Jain, UBS India Economist states, “Our analysis suggests the Indian economy has a favourable combination of neutral policy settings, positive credit momentum, and manageable macro excesses — even as household debt levels have risen to a 15-year high. We expect bank credit to sustain double-digit growth of 13-14% YoY in FY25. A virtuous investment cycle could help shift the credit driver from fast-growing consumer loans towards manufacturing/infra sectors.”
Despite external headwinds, they expect India to remain one of the fastest-growing major economies in 2024 and maintain “our FY25 real GDP growth estimate of 6.2% YoY (consensus: 6.3% YoY). We expect consumption growth to stabilise and a pickup in capex to become more broad-based in FY25. While public capex will likely moderate, we expect private corporate capex to gradually recover post-election. The residential housing should also remain supportive. Lastly, exports may marginally improve, depending on global growth.”
She believes that India will “maintain medium-term growth of 6.5% YoY in FY26-FY30. India’s potential growth could benefit from digitalisation adoption, increased services exports, and a manufacturing push.”
