Indian economy to grow by 6.7% on average per year till 2031: CRISIL

India’s economy is expected to grow at an average rate of 6.7 per cent per annum until the end of the decade, a notch above the pre-pandemic average of 6.6 per cent, CRISIL has said.

The economy will grow at this rate between the financial years 2024 to 2031, and the key contributor to this trend will be capital, said CRISIL, formerly Credit Rating Information Services of India Ltd.

This is a result of the investment-driven strategy of the government after the private sector proved shy of making investments.

Government boost

The government increased capital expenditure significantly to support building expenditure and provided interest-free loans to states to bolster their own investment efforts, the latest CRISIL report said.

CRISIL said that after a robust 7.3 per cent growth this fiscal, there will be moderation to 6.4 per cent in the next financial year.

Middle East

There was also a need to monitor the impact of the Middle East conflict on energy and logistics costs, it said.

In India, the inflation of 5.7 per cent in December 2023 was driven solely by volatile vegetable prices and food grain inflation, the report said.

Indian inflation

This will keep the Reserve Bank of India (RBI) cautious on the rate front as it eyes the four per cent inflation target.

The continued softening of core inflation and deflation in fuel prices gave hope but the persistent high price levels of the food items keep the risks of its transmission to non-food components, the report warned.

CRISIL said the Federal Reserve of the US was expected to cut rates this year.