Key Points
A lower-than-expected inflation in FY24 could boost prospects of GDP growth by increasing real wages, said Ind-Ra economists in a note on Monday.. The economists said a percentage point increase in real wages leads to a rise in GDP by 0.64 percentage point..
So, if inflation were to fall from 5.3% (current projection for Ind-Ra) to 4.5% in FY24, it could lead to real wage rising to 4.4% from 3.6% and GDP growth settling at 6.4% compared to projected 5.9%...
"Wage growth is critical for consumption growth in an economy as it responds to income (wage) growth and inflation," the economists said, adding that private final consumption expenditure had 58% share of GDP between FY21-23...
