India’s economy to grow 6.5-6.7% in FY24: Industry body

New Delhi: India's economy is expected to grow in the range of 6.5-6.7% in FY24 backed by strong domestic drivers and robust capex momentum of the government, said R Dinesh, president of industry body Confederation of Indian Industry (CII).

Dinesh said at a briefing that in a business-as-usual scenario where oil price is at $85 a barrel, the economy may expand by 6.5%. If oil price falls to $70 a barrel, the scenario would be of a 6.7% expansion. The Reserve Bank of India estimates a 6.5% growth this fiscal.

India’s economy grew at 7.2% in FY23, beating the 7% official forecast. For the quarter ended 31 March, the GDP expanded 6.1%, accelerating from 4.5% in the preceding three months and 4% in the year-ago quarter.

"The Indian economy remains resilient in the face of a challenging global environment, and we do not anticipate major domestic roadblocks in the year ahead,” a statement issued by CII said quoting Dinesh.

Apart from the capex push by the government, the resilience in the domestic economy comes from the healthy balance sheets of corporations and a well-capitalised financial system, he said.

Dinesh also said India’s medium-term growth prospects are healthy and projected a 7.8% compounded annual growth rate in the FY22-31 period.

Capital investments, at a larger scale by the government and expected fresh ones by the private sector, will drive medium-term growth, along with productivity-enhancing reforms such as GST, taxation and IBC, the statement said.

Dinesh also called for reforms in the areas of land, labour, agriculture and power, which the industry body believes are particularly important for making India a global manufacturing hub.

Dinesh suggested that the RBI could continue with its pause on rate increases. "RBI has already increased the key repo rate by a cumulative 250 basis points in the last fiscal, the lagged impact of which will be felt on the real sector of the economy this year... Given the fast moderation in inflation, we recommend that RBI should continue with a pause in the key repo rate and also change its stance to neutral," Dinesh said in a presentation.