'An 8% growth economy': Barclays floored by India's blockbuster Q3 GDP numbers

Barclays raised its GDP growth forecast for India by a whopping 110 basis points to 7.8 percent for 2023-24 after the blockbuster October-December number on Thursday. 

"Considering print and strong momentum put up by growth numbers across Q1-Q3 of 2023-24, we raise our 2023-24 GDP growth forecast to 7.8 percent with upside risks given Q1-Q3 2023-24 growth is currently averaging 8.2 percent," Rahul Bajoria, managing director and head of EM Asia (ex-China) Economics at Barclays, said in a note late on February 29.

The bank also revised upward its prediction for 2024-25 by 50 basis points to 7 percent. One basis point is a hundredth of a percentage point.

The RBI, Barclays feels, could leave the interest rates higher for even longer as there is "little urgency" to lower them.

"In our view, four members of the MPC remain hawkish as per the February meeting and solid growth will buy them more time to wait and watch data on inflation, especially on food," Bajoria said.

The government now predicts growth will reach 7.6% in the fiscal year through March, higher than an earlier projection of 7.3%, keeping India on track to remain the fastest-expanding major economy in the world. That’s buoyed sentiment in the nation’s stockmarket and gives Prime Minister Narendra Modi a boost as he contests elections likely to kick off in April.

“The revisions in the recent growth data show India is already an 8% growth economy and accelerating, which sets it apart from the rest of the world,” Barclays said. 

With the right policy mix, India could potentially raise its GDP growth rate closer to 8 per cent, becoming the largest contributor to global growth by the end of this decade, the bank had said in an earlier report.