Indian Economy Soars High! Moody’s Projects GDP Growth for 2024 at 7.2%, Check Out Future Projection

Moody’s Ratings: India’s economy is showing resilience despite global challenges. On November 15, Moody’s Rating agency projected a GDP growth of 7.2% for 2024. The Reserve Bank of India (RBI) also shares a similar outlook. However, future growth projections indicate a slight moderation in the coming years. Here’s a look at the key factors influencing India’s economic outlook.

Moody’s GDP Growth Projections

Moody’s forecasts India’s GDP growth at 7.2% for 2024. For 2025, the growth rate is expected to slow to 6.6%, and for 2026, it may further moderate to 6.5%. Moody’s attributes this steady growth to strong economic fundamentals, such as controlled inflation, government investments, and robust domestic consumption. Despite inflationary pressures, especially in food prices, the economy is expected to maintain positive momentum, with prices stabilizing due to better crop yields and sufficient food grain stocks.

Rising Inflation and RBI’s Cautious Approach

Retail inflation in India reached a 14-month high of 6.2% in October 2023. This exceeded the RBI’s inflation target of 6%. The surge, driven by rising vegetable prices and unpredictable weather, has raised concerns for the central bank. To tackle inflation risks, the RBI has kept the repo rate steady at 6.5%. Managing inflation will remain a priority for the RBI as it looks to balance economic growth with price stability.

Growth Drivers: Consumption and Investments

Strong household consumption is a key growth driver for India. The festive season and rising rural demand are expected to continue boosting consumption. In addition, private investments are gaining momentum, supported by higher business confidence and government infrastructure initiatives. These factors combined are helping maintain India’s economic growth, with manufacturing and services sectors also contributing positively.

Future Growth Outlook: India GDP and Moody’s Projections

India’s economy is projected to grow at 6.7% year-on-year in Q2 2024. However, Moody’s predicts growth to moderate in the coming years, with projections of 6.6% in 2025 and 6.5% in 2026. While inflation risks remain, particularly due to geopolitical tensions and extreme weather, India’s economic trajectory remains largely positive, underpinned by strong consumption, investment, and government efforts to support infrastructure development.

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