Moody’s raised its GDP growth forecast for India in 2024, citing global and domestic optimism in the economy. The revision to 6.8% from 6.1% reflects a stronger-than-expected performance in 2023, with India projected to maintain its status as the fastest-growing among G-20 economies. The Indian economy surged in the December quarter of FY24, expanding by 8.4%, driven by robust manufacturing, electricity, and construction performances. Both the statistics ministry and the Reserve Bank of India have upwardly revised their GDP growth estimates for FY24. Forecasts from different entities converge around sustained growth in the 6.0%-7.0% range. Moody’s highlights government capital spending and strong manufacturing activity as key growth drivers, anticipating policy continuity and infrastructure development focus post-election to support growth momentum in the coming years.
Moody’s anticipates a rebound in private industrial capital spending in India, driven by supply chain diversification benefits and the government’s production-linked incentive scheme. Rising capacity utilization, robust credit growth, and positive business sentiment indicate a brighter outlook for private investment. High-frequency indicators suggest sustained economic momentum, with significant growth in private corporate projects. Urban consumption demand remains resilient, supported by strong tax collections and rising auto sales. Expansion in manufacturing and services PMIs is expected to bolster economic growth further. Recent data shows the continued strengthening of India’s economy, with manufacturing and services sectors accelerating. Despite easing inflation, the RBI maintained the repo rate at 6.5% in February, considering solid growth and inflation above the 4.0% target, suggesting no immediate policy easing.
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