- Risks such as inflation, consumption demand, interest rates will increase
The Wall Street brokerage estimates GDP growth to be 8.2 per cent in the next financial year, with reports of economic growth, inflation and especially monetary policy on consumer demand, as well as being more risk averse with external risks, compared to the last two years.
The biggest risk in the estimate is the reported decline in consumption demand. Which has been a major driver of growth for the last several years. Economists at Bank of America Securities India House said that consumer demand will continue to be the main driver of growth in the coming financial year. Overall Gross Value Added (GVA) growth will be higher in the next financial year due to lower subsidy rates.
Raw materials prices, interest rates challenging
Reserve is expected to raise the repo rate to 100 basis points in the next financial year. Inflation and monetary policy normalization will adversely affect consumer demand. So economists fear a sharp drop in consumer demand. A favorable monetary policy facilitating lower lending rates will be completed in the next financial year. On the other hand, rising prices of raw materials have become a major challenge amid recovering consumer demand. Rising production costs have placed a direct burden on consumers. Which could push up inflation by up to 5.6 per cent.