No “Hindu rate of growth,” consumer spending will drive India’s economic rise, says ING report

The Indian economy will continue to grow as inflationary pressures ease, pushing real spending powers. A report by the global banking and financial service major ING said that India’s economy noted that despite the fourth-quarter slowdown in consumer spending, “this component of national expenditure is likely to do much of the heavy lifting for growth in 2023.

“But we also believe that private investment will remain a strong source of economic growth, helped along by the additional capital spending measures outlined in the latest Union budget,” it said.

Recently however, former Reserve Bank of India governor Raghuram Rajan hit headlines after he said that India was “dangerously close” to the Hindu rate of growth.

India’s economy for the October-December quarter of the current financial year grew at 4.4 per cent per cent as consumption eased amid higher borrowing costs. The growth rate is in sync with the Reserve Bank of India’s projection. For the full year, India is expected to clock a GDP growth rate of 7 per cent.

While India’s economy grew at 6.3 per cent in the second quarter (July-September) it expanded 13.2 per cent in the first quarter (April-June).

The ING report added that as a proxy measure for consumer spending, personal loan growth has been firming in recent months, with the January 2023 growth rate edging up to 23.7% year on year.

It also said that loans for big-ticket items such as vehicles and consumer durables are both growing strongly, signalling no shortage of consumer confidence, along with good growth in education loans.

The International Monetary Fund’s Managing Director Kristalina Georgieva just last month however said that India remains a “bright spot” in the world economy. Earlier this week, Moody’s Analytics said India’s domestic economy is the primary growth driver and that the slowdown in economic activity late last year will only be temporary.

Also read: Has Raghuram Rajan become torchbearer of losers opposing rise of New India?