India's Economic Growth Outlook Adjusted to 6.3% Amid Challenges

India's economy is projected to grow at a slower pace in the current fiscal year, with a growth rate of 6.3%, as private sector investment remains subdued and uncertainty looms over potential US tariffs. This marks a slight downgrade from previous forecasts, reflecting a slowdown from the previous year's 9.2% growth.

Structural Issues and the Impact of US Tariffs

Economists highlight deeper structural issues within India's economy, including stagnant private sector capital expenditure and the inability to generate sufficient high-paying jobs for its youth. The proposed 26% US tariff on Indian imports adds another layer of complexity, affecting business sentiment and potentially delaying capital expenditure plans in key sectors.

Monetary Policy and Inflation Outlook

With consumer inflation below the 4% target, the Reserve Bank of India is expected to continue its moderate rate-cutting cycle, potentially reducing rates to 5.75% in June. Inflation is projected to average 4.0% in FY2024-25, slightly rising to 4.3% the following year.

Global Economic Weakness and Policy Uncertainty

The World Bank has revised India's growth forecast downward, citing global economic weakness and policy uncertainty. Despite being the fastest-growing large economy, India faces challenges in achieving its long-term ambition to become a developed nation without significant structural reforms.