KOCHI: As India’s economic landscape faces uncertainty, the Reserve Bank of India (RBI) and Goldman Sachs present differing forecasts for the country’s growth trajectory.
The RBI, buoyed by optimism, projects a robust real GDP growth rate of 7.2 per cent for the fiscal year 2024-25 (FY25). On the other hand, Goldman Sachs offers a more cautious view, lowering its projections by 20 basis points (bps), now expecting the economy to grow at 6.7 per cent in 2024 and 6.4 per cent in 2025.
This divergence raises critical questions about the forces driving India’s economy—should we trust the RBI’s confidence or Goldman Sachs’ caution?
Expenditure contraction
Goldman Sachs’ downgrade comes in the wake of a significant 35 per cent year-on-year contraction in central government expenditure during the April-June quarter, a period that coincided with the general elections.
The US bank’s economists, led by Santanu Sengupta, cite the government’s commitment to reducing the fiscal deficit and a slowdown in household credit as key factors that could restrain growth.
In contrast, the RBI maintains a more optimistic outlook, suggesting that the easing of monetary policy in the near future could mitigate these concerns.
As the nation navigates these turbulent economic waters, the contrasting forecasts from two influential institutions leave stakeholders pondering which vision of India’s economic future will prevail.
In this case, contrasting the RBI’s optimistic projection with Goldman Sachs’ more cautious outlook highlights the uncertainties and differing perspectives on India’s economic trajectory.
Talking to businessbenchmark.news, a public finance expert noted, “It’s a valuable discussion, particularly given the factors like government expenditure contraction and fiscal deficit targets, which are critical to understanding the country’s growth prospects.”
