According to the Japanese brokerage firm Nomura, India’s GDP growth would slow down to 5.3%, signifying an economic downturn. The brokerage business believes that the Reserve Bank of India’s (RBI) prediction of 6.5% GDP growth for India in fiscal year 2024 (FY24) is overly optimistic.
Nomura predicted that RBI will pivot to rate reduction from October due to excessive uncertainty, weak global growth, and the lag effects of domestic policy tightening, according to Indian media reports, even though multiple agencies have already lowered their growth projections for FY24.
The growth projection provided by the RBI is anticipated to be revised downward by more than 1%. Additionally, the brokerage concurred with the RBI’s assessment of the price increase, stating that the worst of headline Inflation is over.
However, the revised GDP growth prediction of 6.5% for FY24 seems overly optimistic, according to the reports citing Nomura.
According to the RBI, the decline in crude oil prices from $90 per barrel to $85 per barrel was the cause of the growth estimate’s upward revision. The policy call, according to RBI Governor Shaktikanta Das, is a pause on rates rather than a pivot, but RBI will not hesitate to take action if it detects any dangers.
The RBI, which has hiked rates by 2.50 percent over the last 11 months, is expected to take a break once more in June to evaluate the effects of previous rate increases. Additionally, the chances of its projection of a rate drop in October are more likely to occur in an unexpected action, according to the brokerage.
