India will be the fastest growing economy among the G-20 nations in 2024. In the previous three quarters, India’s economy expanded at 7.8 per cent in Q1, 7.6 per cent in Q2 and 8.4 per cent in Q3.
On Saturday, finance minister Nirmala Sitharaman said in an event at Mumbai that India will grow over 8 per cent in the January-March quarter of 2024. The country has become the 5th largest economy of the world and the Modi government has pledged to make it the 3rd largest by 2027.
The 8.4 per cent growth in Q3 has surpassed expectations, post that various institutions have upgraded their GDP growth forecast for India. The most recent upgrade came from Goldman Sachs, which has raised India’s 2024 growth projections to 6.6 per cent, a 10 basis point improvement from its previous forecast.
Earlier this month S&P, Morgan Stanley and Moody’s too have revised India’s growth projections upwards. S&P revises India’s growth projections from 6.4 per cent to 6.8 per cent, Morgan Stanley from 6.1 per cent to 6.8 per cent and Moody’s from 6.6 per cent to 8 per cent for the current fiscal.
The growth projections were revised upward by rating agencies, reflecting both global and domestic optimism in the country’s economy on the back of robust manufacturing activity and infrastructure spending.
Moody expects India to be the fastest growing economy among the G-20 countries on the back of strong government expenditure and domestic consumption. The Modi government has raised capital expenditure from 2 per cent of GDP nine years ago to 3.8 per cent of GDP in the interim budget of 2024, that is about 4.5 times since 2014-15.
The government has allocated Rs 11.11 lakh crore as capital expenditure in the interim budget on February 1, 2024. This is an increase of 11.1 per cent from the last budget. In the 2023 budget CAPEX was increased by a whopping 33 per cent to Rs 10 lakh crore.
S&P says, “We have revised up 2024’s growth forecast for India due to stronger than expected momentum at the start of the year. An improving global economic environment and an expected gradual easing of domestic financial conditions will support economic activity.”
The global analytics firm has also raised India’s FY24 forecast upward to 7.3 per cent from 6.9 per cent projected earlier. On the inflation front, the analytics firm was more optimistic as it projected inflation to decline to 5.1 per cent in FY25 from 5.6 per cent earlier. India’s inflation is likely to average at 5.7 per cent in FY24.
However, the latest government forecast for the growth of the economy stands at 7.6 per cent in FY24. But growth figures of the last three quarters showed that the economy expanded at 8.2 per cent in the first three quarters of this fiscal and adding to this finance minister statement that India’s GDP will grow by over 8 per cent will give rating agencies a thought to re-write India’s growth story.
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