Foreign brokerage Goldman Sachs has upped India GDP growth forecast by 20 basis points to 6.9 per cent this calendar year from an earlier projection of 6.7 per cent.

This follows the stronger-than-expected GDP growth print of 7.8 per cent for the January-March 2024 quarter on the back of strong investment demand and a recovery in consumption growth. 

For the current fiscal (2024-25), Goldman Sachs has projected India’s GDP growth at 6.8 per cent. 

On Friday last, the Central Statistics Office (CSO) announced that India’s fourth quarter (January-March 2024) GDP growth came in at 7.8 per cent, driven by a strong show on the manufacturing front. 

This reading was materially above expectations, Santanu Sengupta, Chief Economist, Goldman Sachs India, said in a research note on Saturday. “Going forward, we bake in lower sequential growth in the coming quarters, given the stronger-than-expected print in Q1 (January-March 2024). As a net result of these changes and the revisions to the earlier series, we raise our CY24 real GDP growth forecast by 20 basis points to 6.9 percent year-on-year,” Sengupta said.

India’s GDP grew robust 8.2 per cent in 2023-24, the CSO said.

Fiscal deficit 

In another research note, Sengupta said that Goldman Sachs Research expects the Central government to meet the 2024-25 fiscal deficit target of 5.1 per cent of GDP from a higher-than-budgeted dividend from the Reserve Bank of India (RBI).

He noted that the Centre had consolidated fiscal deficit for 2023-24 (April-March 2024) to 5.6 per cent of GDP, lower than the revised estimate of 5.8 per cent of GDP, mainly through expenditure cuts in March. This is even as receipts came in higher than Revised Estimate. 

Overall expenditure was lower by ₹50,000 crore compared with the RE, as the government reduced subsidy pay-outs by ₹30,000 crore, while receipts were higher than the RE by ₹20,000 crore on the back of high non-tax revenues (dividend from the RBI and public sector undertakings). 

The RBI recently announced a dividend bounty of ₹2.1-lakh crore to the Central government as against budget estimate of ₹1-lakh crore (including dividends from public sector undertakings).