The economy will grow at around 6 percent in FY24

- However, growth is likely to slow down in recent months due to global shocks

Economists have indicated the relative resilience of the Indian economy after the advance GDP estimates for FY23 came out. However, he also warned of a slowdown in the next quarter due to a slowdown in advanced economies. According to economists, India's GDP growth in FY24 could be around 6 percent. India's economic growth has been healthy despite global uncertainties such as low growth, high inflation, tight fiscal conditions and rising geopolitical tensions. However, growth is likely to slow down in recent months due to global shocks.

According to the latest estimates of the National Statistical Office, India's economy could grow by 7 percent in FY23. This is higher than the Reserve Bank of India and World Bank estimates. The National Statistical Office predicts little impact from the global shock. The International Monetary Fund cut its forecasts for global growth and trade for calendar year 2023 by 20 basis points and 70 basis points to 2.7 percent and 2.5 percent, respectively, in its previous global economic outlook. It predicts that a third of the global economy will be in recession. Global growth is on the verge of slowing down. As such, manufacturing exports and its sub-sectors, sensitive to higher interest rates, may remain weak in FY23 and FY24.

Looking ahead, tighter financial conditions and fears of a global recession could weigh on foreign demand and private investment, economists said. Weak labor market recovery, high core inflation and sluggish demand growth pose the risk of a slowdown in consumption. India's growth outlook for FY24 is unclear. A correction in commodity prices could benefit the manufacturing sector. But sluggish foreign demand will feel the pain. Globally, Covid-19 cases are increasing, which may pose an additional risk to growth.

On the domestic front, lower inflation expectations and a good rabi crop will support domestic demand. He said the growth figures may see little change, as increased demand is waning and financial conditions are tight.

"Considering the constraints on the external front and their potential impact on the Indian economy, we expect GDP growth to hover around 6.1 per cent in FY24," economists said.

Crisil said the recession is expected to deepen next year as global growth slows further. Ratings agency S&P Global expects US GDP growth of 1.8 percent in 2022 and a contraction of 0.1 percent in 2023. On the other hand, the growth rate of the European Union will be between 3.3 percent and 0 percent. The agency made the forecast due to tight financial conditions due to rate hikes by the US Federal Reserve and the energy crisis in Europe.

India's growth cycle over the last two decades has been associated with developed economies. This is due to increased capital inflows and business consolidation. Domestic demand remains relatively stable, so it will be tested next year when economic activity weakens. Rising interest rates will add pressure on India's economy and may also have a dampening effect on consumers and connectivity-based services. For this reason, we estimate that real GDP growth will decline to 6 percent, which is at risk of falling further.