India will remain the fastest-growing major economy this year and next, boosted by continued strong government spending, according to a Reuters survey of economists, who also said inflation is unlikely to rise again.
The world’s most populous country performed better than expected in the first two quarters of this fiscal year ended March, as the government boosted already strong spending to boost growth ahead of national elections in May. Has increased.
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Most of Prime Minister Narendra Modi’s government spending in recent years has gone towards building infrastructure. Private investment and job creation have lagged behind, suggesting that New Delhi will continue to play a larger role in India’s economic growth.
A January 10-23 Reuters survey of 54 economists predicted the economy would grow 6.9% this fiscal year, a small upgrade from 6.7% in the December survey. It was then projected to expand by 6.3% in the next fiscal year, the same as the previous survey.
While inflation rose to 5.69% in December at the fastest pace in four months due to food price pressures, economists expect it to ease soon.
“We expect inflation to ease substantially in the short term, with already low core inflation trending downwards,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“However, at the same time, these trends also reflect enduring sluggishness in the economy, particularly with respect to private consumption, the most important aspect of growth.”
The survey showed consumer price inflation averaging 5.4% and 4.7% this fiscal year and next, with 23 out of 32 economists believing the risk of a significant revival in the coming six months is low.
Consumer spending, which accounts for 60% of Asia’s third-largest economy, has slowed. But a strong majority of 25 out of 28 economists said employment would improve over the next six months.
Still, if job growth does not match the overall economic growth rate or the pace of millions of youth joining the workforce each year, consumption is likely to decline.
“Although the Indian economy is on a strong trajectory…there are signs of a slowdown due to weakness in private consumption demand,” said Suman Chaudhary, chief economist at Acuity Ratings & Research.
“But this will depend on the measures taken by the government to generate more employment and increase the disposable income of a large section of the population.”
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)
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