Chennai, Feb 20,2023: Credit rating agency Acuite Ratings and Research on Monday reiterated India’s gross domestic product (GDP) growth estimate for FY23 at 7 per cent.

It also anticipates the economic growth trajectory in FY24 to slip to 6 per cent, which would still make India one of the highest growth economies in the world.

According to the ratings agency, the Indian economy has managed to withstand the headwinds rather well over the last several months amidst a tough global environment.

“Domestic growth impulses have gained strength, as urban consumption continues to push demand for both goods and services with derivative support accruing from the government capex cycle which has got a further boost from the Union Budget 2023,” Acuite Ratings said.

Private investments remain somewhat confined, unsurprisingly in an environment of heightened global uncertainty although the higher credit growth reflects the start of a trickle, it said.

The rating agency also said the breadth of domestic economic activity should continue to find support in a healthy rabi harvest and improved rural demand, the strength in services sector exports, pent-up demand in the travel and the tourism sector along with the Central government’s consistent focus on pushing capital expenditure.

“Nevertheless, growing risks to growth outlook emanate from the impending slowdown in global demand in 2023, with Dec-22 domestic export growth contraction of 12.2 per cent YoY – i.e., the steepest contraction in two years, serving as a harbinger of tougher times ahead,” Acuite Ratings said.

Further, the continuing rise in interest rates and a relatively tighter liquidity environment may have a lagged impact on demand, it added.