January 29, NEW DELHI (Reuters) - Despite new geopolitical risks arising from the Red Sea situation that could affect global inflation and economic output, India anticipates that its economy will rise by about 7% in the upcoming fiscal year.

The committee led by Chief Economic Adviser V. Anantha Nageswaran predicted that India's growth will surpass that of the global economy in the upcoming fiscal year, which begins on April 1, thanks to steady domestic demand and private investment, in the government's most recent economic review released on Monday.

"Recent events in the Red Sea may have brought back concerns over reliance on global supply chains, further aggravating the slower growth in global trade in 2023," according to the government.

According to the report, if supply chain disruptions continue in 2024, it may have an effect on global trade flows, transportation costs, economic production, and inflation. However, India is "quietly confident of weathering the emerging disturbances."

Days before the government of Prime Minister Narendra Modi unveils the final budget before the nation's summer general election, growth forecasts have been released.
On February 1, Finance Minister Nirmala Sitharaman will introduce the budget, which takes the growth forecasts into account.

The most recent forecast contrasts with the initial advance predictions, which predicted that the GDP would grow by 7.3% in the current fiscal year, 7.2% in 2022–2023 and 8.7% in 2022–2022.

"The robustness seen in domestic demand, namely, private consumption and investment, traces its origin to the reforms and measures implemented by the government over the last 10 years," the report stated.

India is on course to surpass Germany and Japan to become the third-largest economy in the world by 2030, according to S&P Global Ratings, which predicts that it will continue to grow at the quickest rate among major economies for the next three years.

The analysis stated that it is "eminently possible" for the Indian economy to develop above 7% in the upcoming years due to the financial sector's strength and current and upcoming structural changes.

The assessment also stated that India anticipates headline retail inflation to progressively decline, though it did not give a timeline. December saw an increase in annual retail inflation from 5.55% to 5.69%.