Moody’s, the global rating agency, has revised its growth forecast for India in the calendar year 2024, upgrading it to 6.8 percent from the previous estimate of 6.1 percent. This upward revision is attributed to the stronger-than-expected economic performance witnessed in 2023, coupled with the diminishing global economic challenges.
India's real GDP demonstrated robust expansion, recording a year-over-year growth of 8.4 percent in the fourth quarter of 2023, culminating in a full-year growth of 7.7 percent for the same year.
Moody’s highlighted that the government's capital spending and vigorous manufacturing activity significantly contributed to the strong growth trajectory observed in 2023. With the waning global headwinds, the Indian economy is anticipated to sustain a real GDP growth rate of 6-7 percent comfortably.
According to Moody’s Global Macroeconomic Outlook for 2024, India is projected to maintain its position as the fastest-growing economy among G-20 nations during the forecast period. Looking ahead to 2025, GDP growth is forecasted at 6.4 percent.
The agency pointed out that various high-frequency indicators suggest the continuation of robust economic momentum into the first quarter of 2024. Factors such as healthy goods and services tax collections, increasing auto sales, consumer confidence, and substantial credit growth indicate the resilience of urban consumption demand. Furthermore, expanding manufacturing and services Purchasing Managers' Index (PMI) figures provide further evidence of solid economic performance.
In terms of fiscal policy, the interim budget for this year targets a capital expenditure allocation of Rs 11.1 lakh crore or 3.4 percent of GDP in fiscal year 2025, marking a 16.9 percent increase from the previous year's estimates. Moody’s anticipates policy continuity post-general elections and continued emphasis on infrastructure development.
While private industrial capital spending has been sluggish, Moody’s expects a pickup driven by ongoing benefits from supply chain diversification and the government's Production Linked Incentive scheme aimed at enhancing key targeted manufacturing sectors.
Highlighting the geopolitical landscape, Moody’s underscores the significance of elections in G-20 countries, including India, in shaping domestic and foreign policies for the forthcoming years. The agency notes that these elections can have far-reaching implications beyond borders, influencing economic and public policies in an increasingly interconnected world.
Geopolitical dynamics are expected to impact international trade flows, capital movements, migration trends, and the functioning of international organizations in the years ahead. Domestically, industrial and trade policies are becoming increasingly intertwined with foreign policy considerations.
Read also | Stalemate in WTO Negotiations; E-commerce Duty Moratorium Prolonged Yet Again
Read also | February Sees 12.5% Surge in GST Collections, Exceeding Rs 1.68 Lakh Crore
