Key Takeaways 

  • India’s economy is showing limited signs of slowing as

    indicators point to a pick-up in activity at the turn of the

    year, after very rapid growth through 2023.

  • Q4 GDP showed the economy continues to surprise to

    the upside and we have adjusted our 2024 forecast

    from 5.8% to 6.3% to reflect the strong momentum.

  • Despite the booming economy, core inflation has

    continued to moderate and, while uncertainty remains

    around food inflation, we expect headline inflation to

    ease by mid-year, creating scope for monetary easing.

  • Moreover, fiscal consolidation will put the onus on the

    Reserve Bank of India to support private sector activity

    and, as such, we continue to pencil in the first cut for


  • However, monetary conditions do not appear

    particularly tight and, with strong growth likely to

    persist into Q1, the extent to which policymakers will

    cut has shrunk in our view. We now see 75bps of cuts

    in 2024, with the policy rate settling at 5.75%.

  • There are also growing risks of a ‘no landing’ scenario

    in India given the economy’s resilience. A pick-up in

    domestic demand could reverse the progress in core

    disinflation and dissuade policymakers from providing

    further support for the economy.


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