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Rating agency Crisil in its annual growth forecast has projected India’s gross domestic product (GDP) growth at 6% in the next fiscal year (FY24), in line with consensus estimates, driven by an increased capex by the private sector. It added that the private sector capex is expected to deliver double-digit revenue growth for the second year on the trot. Besides, the economy is projected to grow 7 per cent this fiscal (FY23). The agency also sees the economy averaging 6.8 per cent growth over the next five fiscals. It further said it expects the corporate revenue to log in double-digit rise again next fiscal.

Crisil Chief Economist DK Joshi said a complex interplay of geopolitical events, stubbornly high inflation and sharp rate hikes to counter that have turned the global environment gloomier. On the domestic front, the peak impact of the rate hikes -- 250 basis points since May 2022, which has pushed interest rates above pre-Covid levels, will play out more in the next fiscal. He said retail inflation is expected to average 5 per cent in FY24 from 6.8 per cent in FY23, owing to the high-base effect and some softening of crude and commodity prices.

However, a good rabi harvest would help cool food inflation, provided the monsoons are normal while the slowing economy should moderate core inflation. Though, he said risks to inflation are tilted upward, given the ongoing heat wave and the World Meteorological Organization's prediction that an El Nino warming is likely over the next couple of months. On the external sector, Joshi said the country's external vulnerability is expected to decline with a narrower current account deficit (CAD) and modest short-term external debt.

While CAD is expected to narrow to 2.4 per cent of GDP or $8 billion next fiscal from an estimated 3 per cent of $100 billion this fiscal, its financing may face challenges as foreign portfolio flows remain volatile and external commercial borrowings are less attractive. In the corporate sector, Joshi said revenue growth is expected to touch double-digits in fiscal 2024 despite a global slowdown and interest rate hikes. This will be driven by a 10-12 per cent growth in revenue for non-commodity sectors despite the cooling prices.