Goldman Sachs Lowers India’s GDP Forecast for 2024 and 2025
Goldman Sachs Group has revised its GDP growth forecasts for India for the years 2024 and 2025, citing a reduction in government expenditure. The bank now projects an economic growth rate of 6.7% for 2024 and 6.4% for 2025, which reflects a decrease of 20 basis points from its earlier estimates.
Impact of Government Spending Cuts
The adjustment in GDP forecasts for the current year is primarily attributed to a significant year-over-year reduction of 35% in government spending during the April to June quarter, coinciding with the Lok Sabha elections. This decline in expenditure is seen as a strategic move by the government to manage fiscal discipline.
Fiscal Deficit Goals and Economic Implications
Goldman Sachs’ economist, Shantanu Sengupta, noted that the projections for 2025 are impacted by the government’s aim to bring the fiscal deficit down to below 4.5% of GDP. This goal may lead to further restrictions on public spending, which could potentially slow down economic growth.
Projected GDP Growth Rates
| Year | GDP Growth Rate (%) |
|---|---|
| 2024 | 6.7 |
| 2025 | 6.4 |
Conclusion
The updated forecasts from Goldman Sachs highlight the delicate balance the Indian government must maintain between fiscal responsibility and economic growth. As the country approaches upcoming elections and continues to navigate external economic pressures, monitoring these changes will be essential for stakeholders and policymakers alike.
Stay tuned for further updates on India’s economic outlook as more data becomes available.
