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India’s economic growth may surpass 6% for rest of the decade: Goldman Sachs

February 16, 2024 4:17 PM IST

Reserve Bank of India | Santanu Sengupta | Bloomberg | Goldman Sachs Group

India’s economic growth may surpass 6% for the remainder of the decade, potentially reaching 6.5% or higher, Goldman Sachs Group’s India economist, Santanu Sengupta, said on Friday.

Sengupta shared his views in an interview with Bloomberg Television’s Haslinda Amin, highlighting India’s appeal for increased investments compared to China.

While forecasting a growth rate of 6.3% for the upcoming fiscal year starting in April, Sengupta’s projection is slightly lower than the Reserve Bank of India’s estimate of 7%. He credited India’s economic resilience to its demographics, strong government-led spending, and robust domestic demand, making it an attractive destination for future investments.

The concept of potential growth, referring to the pace at which an economy can expand without causing excess inflation, was discussed in light of India’s central bank governor estimating the nation’s potential growth rate at around 7% last month.

Goldman Sachs expects a rise in private sector investments in India after nationwide elections. Sengupta noted that Indian companies have reduced debt, resulting in the cleanest balance sheets seen in the past two decades.

Sengupta anticipates the Reserve Bank of India to monitor the Federal Reserve’s actions before adjusting its monetary policy. He outlined a three-phase approach by the RBI, involving liquidity easing, policy stance adjustment, and subsequent interest rate cuts. Goldman Sachs expects two rate cuts in India during the latter half of the year.

However, if the economy falls short of expectations, Sengupta cautioned that the RBI may be compelled to implement interest rate cuts at a faster and deeper pace.

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