Moody's Upbeat Outlook: India's GDP Growth Forecast Soars to 8% for FY24

Leading international rating agency Moody's has revised its GDP growth estimate for the Fiscal year 2023–24 to an astounding 8%, raising the bar for India's economic strength.

The estimate is supported by India's substantial government spending, strong domestic consumption, and its ability to profit from changes in global commerce, especially once businesses have started to diversify away from China.

The revised estimate confirms that among the main G20 countries, India's GDP is expanding at the quickest rate.

Moody's raises their growth estimate.

The revised GDP growth prediction of 8% for the Fiscal year ending in March 2024 reflects Moody's outlook for the Indian economy.

The agency underscores that the primary drivers of India's economic development would be government capital spending and robust domestic demand.

Moreover, as companies move away from China, India will benefit from rising international trade and investment prospects.

Economic vigor and December quarter expansion

As to a report published by Mint, the surprise growth increase of 8.4% in the December quarter, which defied expectations of a decline, Demonstrates India's economic resiliency.

The updated GDP estimates released by the National Statistical Office show stronger growth over the first two quarters of the fiscal year.

Positively, the HSBC Flash India Composite Purchasing Managers' Index (PMI) shows that India is among the major countries with the quickest rate of growth in terms of key indicators in the manufacturing and services sectors.

Monetary policy and the changes in inflation

Moody's predicts that India's inflation rate will trend lower, with a drop from the previous fiscal year's peak of 6.7% to 5.5% in the fiscal year 2023–2024.

This disinflation anticipation is seen to be a key component for monetary relaxation.

Moody's observes that although the Reserve Bank of India (RBI) has kept the repo rate at 6.5%, a cautious approach to policy easing is suggested by the strong growth dynamics and inflation that is over the 4.0 percent objective.

Monetary policy and variations in the inflation rate

According to Moody's, India's inflation rate will decline, peaking at 6.7% in the preceding fiscal year and falling to 5.5% in the fiscal year 2023–2024.

One important element of monetary relaxation is seen to be this expectation of disinflation.

Despite the Reserve Bank of India's (RBI) decision to maintain the Repo rate at 6.5%, Moody's notes that the country's robust growth dynamics and inflation over the 4.0 percent target point to a cautious approach to policy easing.