Moody's Projects India's GDP Growth At 6.8% For FY 2024-25

New Delhi, June 1 (KNN) In its latest Global Macro Outlook for 2024-25, the international credit rating agency Moody's Ratings has projected India's real GDP growth to reach 6.8 percent in the current fiscal year, followed by a 6.5 percent expansion in 2025.

This positive outlook is underpinned by the country's strong economic performance and anticipated policy continuity after the general elections.

Official data indicates that India's real GDP grew by an impressive 7.7 percent in 2023, up from 6.5 percent in the previous year.

This robust growth was driven by the government's substantial capital expenditure and vigorous manufacturing activity.

Several high-frequency economic indicators, such as robust goods and services tax collections, rising automobile sales, consumer optimism, and expanding manufacturing and services Purchasing Managers' Indices (PMIs), have signalled sustained economic momentum during the March and June quarters of the current fiscal year.

Moody's report stated, "We believe the Indian economy should comfortably register 6-7 percent annual real GDP growth, and we forecast around 6.8 percent growth."

The agency expects strong, broad-based growth to be sustained due to post-election policy continuity.

The interim Budget for 2024-25 has allocated a significant amount of Rs. 11.1 lakh crore, or 3.4 percent of GDP, towards capital expenditure, representing a 16.9 percent increase compared to the previous fiscal year's estimates.

Moody's anticipates continued policy focus on infrastructure development following the general elections.

Additionally, private industrial capital spending is projected to accelerate, driven by ongoing supply chain diversification and the government's Production Linked Incentive (PLI) scheme aimed at boosting targeted manufacturing industries.

As of December 2023, companies have invested around Rs. 1.07 trillion across the 14 sectors covered under the PLI scheme, with exports surpassing Rs. 3.40 trillion since the scheme's implementation.

Moody's Ratings further noted that healthy corporate and bank balance sheets, rising capacity utilisation, and upbeat business sentiment point toward an improving private investment outlook in India.

While sporadic food price pressures continue to inject volatility into the inflation trajectory, headline and core inflation eased to 4.8 percent and 3.2 percent, respectively, in April, down sharply from their respective 2022 peaks of 7.8 percent and 7.1 percent.

In its latest monetary policy review, the Reserve Bank of India (RBI) maintained the repo rate at 6.5 percent, unchanged since February 2023.

According to Moody's Ratings, "Given the solid growth dynamics and inflation above the 4 percent target, we do not expect policy easing any time soon."

(KNN Bureau)