India's 2024 GDP growth projection estimated to 6.8% from 6.1% earlier

A major global rating agency has revised upwards its growth projections for the Indian economy, buoyed by the robust performance witnessed in the latter half of 2023. In a recent Global Macroeconomic Outlook for 2024, has raised India's GDP growth estimate for the upcoming year to 6.8%, a significant increase from its earlier forecast of 6.1%.

The agency cited the substantial growth in the country's economy and international trade as the driving force behind this upward revision. Additionally, India's GDP growth for the year 2025 could reach 6.4%, slightly higher than the previous projection of 6.3%.

"India's economy has performed well and stronger-than-expected data in 2023 has caused us to raise our 2024 growth estimate to 6.8 per cent from 6.1 per cent. India is likely to remain the fastest growing among G-20 economies over our forecast horizon," the agency stated in its report.

The robust momentum carried over from the September and December 2023 quarters, which is expected to provide a significant boost to the March 2024 quarter. "Robust goods and services tax collections, rising auto sales, consumer optimism and double-digit credit growth suggest urban consumption demand remains resilient. On the supply side, expanding manufacturing and services PMIs add to evidence of solid economic momentum," the report noted.

With the upcoming general elections in India, the agency expressed its expectation of policy continuity and a sustained focus on infrastructure development. "We expect policy continuity after the general election and continued focus on infrastructure development.”

The report also touched upon the sluggish private industrial capital spending, which is anticipated to pick up pace due to ongoing supply chain diversification benefits and the government's Production Linked Incentive scheme aimed at boosting key targeted manufacturing industries.

The projection comes on the heels of India's real GDP expanding by 8.4% year-over-year in the fourth quarter of calendar year 2023, resulting in an impressive 7.7% growth for the entire year. Furthermore, the interim budget for the current fiscal year has allocated ₹11.1 lakh crore, or 3.4% of GDP, towards capital expenditure for 2024-25, representing a 16.9% increase over the previous year's estimates.