According to a Reuters survey of experts, India will continue to grow at the quickest rate among major economies this year and next, due to high government spending. These economists also predicted that inflation would not likely spike again.
The most populous nation in the world outperformed forecasts in the first two quarters of the current fiscal year, which ended in March. This is because the government is increasing its already high levels of expenditure to support economic development ahead of the May national election.
Prime Minister Narendra Modi’s government in recent years a lot has been spent on building infrastructure. The fact that private investment and job creation have underperformed indicates that New Delhi will continue to dominate India’s economic expansion.
An increase from 6.7% in a December poll, the economy is expected to grow by 6.9% this fiscal year, according to a Reuters survey of 54 economists conducted on January 10-23. Then, according to the last poll, it was predicted to grow by 6.3% in the upcoming fiscal year.
Due to pressure from rising food costs, inflation increased in December at its sharpest rate in four months, although economists predict that it will soon decline.
“We expect inflation to subside quite drastically in the short run, catching up to the downside with already-subdued core inflation,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“At the same time, though, these trends also reflect an enduring sluggishness taking hold in the economy, particularly with regards to private consumption, the most important aspect of growth.”
