Even as over 7 per cent growth for India is in sight in the financial year 2024-25, issues concerning global trade and finance could hamper the country’s growth, particularly small businesses, said data and analytics company Dun & Bradstreet on Monday. The forecast was part of the The Economy Observer report by the company sharing projections for critical economic indicators.
“India is set to achieve over 7% growth for the fourth consecutive year in FY25 — due to a significant boost in capital expenditure — the highest in 21 years. However, external factors, such as challenges in global trade and finance, could impact India’s growth,” said Dr Arun Singh, Global Chief Economist, Dun & Bradstreet.
Singh, however, cautioned that demand slowdown from key export destinations like UK and EU, is a concern, even more so for smaller businesses who are grappling with disruptions in key shipping routes.
“Additionally, risk aversion of financial institutions amid high interest rate environment is making funds expensive, particularly, for smaller businesses,” he added.
According to a statement on the report by Dun & Bradstreet, the Index of Industrial production (IIP) is expected to have registered a moderate growth in January 2024, owing to factors such as the waning of demand post the festive season, pre-election apprehension amongst businesses and likely impact of a high interest rate regime on small businesses.
Moreover, while the slowdown in the manufacturing sector is a concern, the significant allocation to the capital expenditure in the union budget for 2024–25 is expected to drive activity, particularly, in the capital goods and infrastructure segment going ahead.
Dun & Bradstreet said it expects the IIP to have grown by 3.2 per cent in January 2024.
IIP tracks manufacturing activity across multiple sectors of an economy for the period under review, usually a month. Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight core industries comprising around 40 per cent of the weight of items included in IIP.
The report added that the rise in global oil prices is imparting an upward pressure to the inflation.
Stickiness in the domestic price for certain food products, such as pulses, spices and vegetables, along with frequent disruptions in the global supply chain is likely to keep retail inflation above the RBI’s target of 4 per cent in the near term, it said.
According to Dun & Bradstreet, the Consumer Price Inflation (CPI) is expected to be 5.3 per cent and Wholesale Price Inflation (WPI) to be around 0.1 per cent for February 2024.