The countdown to the next RBI Policy in early December has already begun. While inflation has come to multi-month lows, it is still above the 4% target set by RBI. In its monthly economic outlook, Crisil points out that they expect RBI to keep rates unchanged for the remainder of this fiscal
Dharmakirti Joshi, Chief Economist- Crisil highlighted that “a rate cut can be expected only in the first quarter of the next fis cal, assuming normalising inflation and slowing growth . The MPC kept policy rates unchanged in its October meeting, while maintaining its stance of withdrawal of accommoda tion.”
The country’s overall fiscal health has been another key matter of concern. The Budget has targeted a reduction in the Centre’s fiscal deficit to 5.9% of GDP this fiscal from 6.4% of GDP the previous fiscal. In the first six months of this fiscal, the centre’s fiscal deficit stood at 39.3% of the Budget target, compared with 37.3% in same period last year. According to them, “Capital and revenue expenditure as a proportion of budget target have been higher than last year.” They expect a downward trend going forward.
Onto the pace of GDP growth in the country, Joshi expectes, “India’s real GDP growth to slow to 6% year-on-year in FY24 from 7.2 % the previous year. Slowing global growth in the second half of this fiscal is expected to hit the Indian economy through weaker exports. Domestic demand is expected to be mildly impacted by the lagged impact of RBI’s past rate hikes. Real GDP growth accelerated to 7.8% year-on-year in the first quarter of FY24, from 6.1% the previous quarter.”