Economic Landscape and Policy Outlook: A Snapshot of India’s Growth Trajectory

Against the backdrop of a robust economic landscape, India’s growth trajectory appears almost picture-perfect. With growth surpassing 7 percent for three consecutive years until FY24 and expected to remain strong at 7 percent, according to RBI estimates, the assessments on the growth cycle are optimistic. The government’s capacity buildup through infrastructure projects, coupled with anticipated recovery in private sector capital expenditure, is poised to sustain elevated growth levels for the foreseeable future.

Key indicators such as capacity utilization, which increased to 74.0 percent in Q2FY24, surpassing the long-term average of 73.7 percent, underscore the resilience of the economy. Furthermore, efforts to enhance productivity, particularly by leveraging the potential of the youth and women workforce, contribute to a conducive environment for inclusive growth.

On the inflation front, the scenario is equally promising. Despite previous concerns about food prices, particularly vegetables, being a significant risk to India’s inflation trajectory, recent developments suggest a favorable trend. The arrival of winter crops has alleviated pressure on vegetable prices, with a notable moderation observed since peaking at 38 percent month-on-month in July. Subsequent months have seen a continued easing, and February 2024 data indicates a mere 0.4 percent increase month-to-date, with significant declines in heavyweight commodities such as onion and potato, as per NHB data.

Overall, the convergence of conducive economic conditions, including sustained growth momentum and controlled inflation, paints a positive outlook for India’s economic trajectory. As policymakers navigate these dynamics, the focus remains on fostering inclusive growth while maintaining price stability, thereby laying the foundation for a resilient and prosperous future.


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