India’s Economy to Remain Fastest Growing Among G-20 Economies

Introduction

Moody’s recent Global Macroeconomic Outlook for 2024 paints an optimistic picture for India’s economy. The report forecasts that India will maintain its position as the fastest-growing economy among the G-20 nations. With stronger-than-expected performance in 2023, Moody’s has revised its growth estimate for 2024 to 6.8 per cent, up from the previous 6.1 per cent projection.

Strong Momentum

The Indian economy has shown robust momentum, with high-frequency indicators indicating continued strength in the March quarter of 2024. Factors such as robust goods and services tax collections, increasing auto sales, consumer optimism, and double-digit credit growth point towards resilient urban consumption demand. Additionally, expanding manufacturing and services PMIs further bolster evidence of solid economic momentum.

Fiscal Policy

This year’s interim budget targets a significant capital expenditure allocation of Rs 11.1 lakh crore, equivalent to 3.4 per cent of GDP for the fiscal year 2024-25. This allocation represents a substantial increase of 16.9 per cent over the estimates for 2023-24. Moody’s expects policy continuity post-general elections, with a continued focus on infrastructure development.

Private Sector Outlook

While private industrial capital spending has been sluggish, Moody’s anticipates an uptick due to ongoing supply chain diversification benefits and the government’s Production Linked Incentive scheme aimed at boosting key manufacturing industries.

Implications of Elections

The year 2024 marks an election year for several G-20 countries, including India. Moody’s emphasizes that the outcomes of these elections can have far-reaching implications beyond borders. Newly elected leaders will shape domestic and foreign policies for the next several years, influencing businesses’ decisions regarding supply chains and capital sources. Geopolitical realities are expected to impact international trade flows, capital movements, migration trends, and the functioning of international organizations. Domestically, industrial and trade policies are increasingly intertwined with foreign policy considerations.

In summary, Moody’s optimistic outlook for India’s economy underscores the country’s resilience and potential for sustained growth amid evolving geopolitical and economic dynamics.

@newzquest