Navigating Global Headwinds: Axis Bank Forecasts Further Upgrade to India's GDP Amid Challenges

In a recent report titled 'India Economics Outlook 2024: India Resilient in a growth-challenged World,' Axis Bank's Chief Economist, Neelkanth Mishra, provides valuable insights into India's economic trajectory. Despite a positive revision in GDP forecasts for fiscal year 2024 (FY24), the report underlines potential headwinds, making the economic journey ahead a nuanced one.

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Resilient Growth in FY24:

India's GDP growth, outperforming expectations at 7.6% in the September quarter, has garnered attention on the global stage. A significant contributor to this growth has been rising rural consumption and increased capital expenditure, prompting the Reserve Bank of India to revise the growth forecast for FY24 to 7%, up from the previous estimate of 6.5%.

Cautionary Notes Amidst Optimism:

However, Axis Bank's report issues a cautionary note, emphasizing that FY25 may witness a slowdown due to intensifying global headwinds. The report predicts volatility in food inflation throughout FY25, despite a moderation in core inflation, necessitating a careful navigation through economic challenges.

Challenges Ahead:

Tight liquidity conditions, equivalent to a potential 25-30 basis points rate hike, are expected to persist until global risks subside, as per the report. It underscores the importance of fiscal discipline, infrastructure development, and sustained capital expenditure to bolster and prolong India's growth story.

Inflation Dynamics:

After reaching a 15-month high of 7.4% in July, India's retail inflation dropped to a four-month low of 4.87% in October. The report attributes this to a reduction in services inflation, reflecting slack in the labor force. It emphasizes the need for fiscal discipline, infrastructure development, and increased capital expenditure to drive long-term growth.

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Global and Domestic Variances:

While the global economy grapples with inflation, high-interest rates, and slow growth, India stands out with robust performance. Various agencies, including the International Monetary Fund, S&P Global, Morgan Stanley, Citi, and Goldman Sachs, have revised India's GDP growth forecasts. Despite these optimistic domestic trends, challenges like net export drag and weak private consumption, with measurement anomalies, persist.

S&P Global's Perspective:

S&P Global's recent revision of India's GDP growth projection for FY24 to 6.4%, up from 6%, showcases the strength of domestic tailwinds. However, the report anticipates a slowdown in FY25 to 6.4%, down from the previous estimate of 6.9%, citing subdued global growth and the lagged impact of Reserve Bank of India's interest rate hikes.


As India navigates the complex terrain of global economic challenges, Axis Bank's report serves as a crucial compass. While optimistic about the immediate future, it calls for strategic measures—fiscal discipline, infrastructure development, and sustained capital expenditure—to ensure India's resilience in the face of evolving economic landscapes.

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