The Indian economy is likely to grow at a rate of 7 per cent in the current fiscal, against the 8.7 per cent growth in 2021-22, the National Statistical Office (NSO) said on Friday.

Responding to NSO’s forecast, economists are of the view that the GDP growth to moderate to 6 – 6.1 percent in FY24.

The NSO, while releasing the first advance estimates of National Income for 2022-23, said that the “Real GDP (gross domestic product) or GDP at Constant (2011-12) Prices in the year 2022-23 is estimated at Rs 157.60 lakh crore, as against the Provisional Estimate of GDP for the year 2021-22 of Rs 147.36 lakh crore, released on May 31, 2022. The growth in real GDP during 2022-23 is estimated at 7 percent as compared to 8.7 percent in 2021-22”.

In December 2022, the RBI had scaled down the GDP growth forecast to 6.8 per cent for the current fiscal from the earlier estimate of 7 per cent, mainly due to prevailing geopolitical tensions and global tightening.

Reacting to the GDP projections Rajani Sinha, Chief Economist, CARE Ratings told IANS: “India’s economy grew at 7 percent in FY23 supported by the services sector. As expected, manufacturing sector, which has been under pressure due to high input costs, recorded weak growth. On the expenditure side, consumption growth and investment growth showed resilience aided by post-pandemic normalization in economic activities and strong pent-up demand. Capex boost by the government has also been supportive of growth. With global growth slowing, there was a widening of net exports that ate into overall GDP growth.”

Looking ahead, with challenges looming on the external front, India’s export growth is likely to moderate in FY24. The manufacturing sector will benefit from moderation in commodity prices but will feel the pain of lower external demand. In the services sector, there could be some fading of pent-up demand that we saw in FY23, Sinha said.

While the government will continue its focus on capital spending, the main challenge will be a durable pick-up in private investment amid rising borrowing costs, demand uncertainty, and global slowdown, she added.

“Considering the headwinds arising on the external front and its possible spillovers on the Indian economy, we expect the GDP growth to moderate to around 6.1 percent in FY24,” Sinha said.

Similarly, another credit rating agency CRISIL projects real GDP growth to slow to 6 percent next fiscal, with risks tilted to the downside.

According to CRISIL, a deceleration is largely anticipated in the second half of the current year due to the base effect as well as the adverse impact of slowing global growth.

Recovery in household consumption and catch-up in contact-based services is expected to support growth this fiscal.

The slowdown is expected to intensify next year, as global growth falls further.

S&P Global expects the US to swing from a GDP growth of 1.8 percent in 2022 to a contraction of 0.1 percent in 2023, and the European Union from 3.3 percent to 0 percent, driven by tight financial conditions induced by rate hikes of the US Federal Reserve, and the European energy crisis, CRISIL said.

“While domestic demand has stayed relatively resilient so far, it would be tested next year by weakening industrial activity. It will feel the pressure from increasing transmission of interest rate hikes to consumers as well, and as the catch-up in contact-based services fades,” CRISIL added.

Be that as it may, in a significant projection, the output of the manufacturing sector is estimated to slide down to 1.6 percent as against a growth of 9.9 percent in 2021-22, the first advance estimate noted further.

Private final consumption expenditure, a yardstick for demand, is projected to rise 7.7 percent in 2022-23 from a year ago.

Gross fixed capital formation, a measure of investment, is estimated to rise around 11.5 percent in the current fiscal, the data said.

Electricity sector growth in the current fiscal is estimated at 9 percent, compared to 7.5 percent in the previous fiscal.

Trade and hotels estimated growth is 13.7 percent, up from last fiscal’s 11.1 percent. For finance and real estate, the estimated growth is 6.4 percent from last fiscal’s 4.2 percent.

Estimated growth for the agriculture sector is pegged at 3.5 percent compared to the previous fiscal’s 3 percent.

Mining growth estimation is at 2.4 percent, up from last year’s 11.5 percent.