Moody’s Ratings projects India to grow 6.8% in 2024 on strong growth, post-election policy continuity

03 Jun 2024 Evaluate

Taking into account strong economic expansion along with post-election policy continuity, Moody’s Ratings has projected India to grow 6.8 per cent in the current year (2024), followed by 6.5 per cent in 2025. India’s real GDP grew 7.7 per cent in 2023, up from 6.5 per cent in 2022, driven by robust capital spending by the government and strong manufacturing activity.

Moody’s in its update to Global Macro Outlook 2024-25 said ‘We believe the Indian economy should comfortably register 6-7 per cent annual real GDP growth and we forecast around 6.8 per cent growth’. It said strong, broad-based growth will likely be sustained with post-election policy continuity. It said this year’s interim Budget targets capital expenditure allocation of Rs 11.1 lakh crore, or 3.4 per cent of GDP in 2024-25, 16.9 per cent above the 2023-24 estimates. It also said ‘We expect policy continuity after the general election and continued focus on infrastructure development’.

It added private industrial capital spending is also set to pick up with ongoing supply chain diversification and the government’s production linked incentive (PLI) scheme to boost targeted manufacturing industries. Companies have invested around Rs 1.07 trillion through December 2023 across the 14 sectors covered under the PLI scheme, with exports surpassing Rs 3.40 trillion since the scheme’s implementation, as per government data. It further said ‘Healthy corporate and bank balance sheets, rising capacity utilisation and upbeat business sentiment also point to an improving private investment outlook’. It noted ‘Given the solid growth dynamics and inflation above the 4 per cent target, we do not expect policy easing any time soon’.