Moody’s has affirmed its GDP growth projections for India, maintaining a forecast of 6.8% for 2024, with a slight dip to 6.5% expected in 2025. The agency attributes this outlook to robust domestic and international demand, which supports growth across emerging markets with varying trajectories. In its March Global Macro Outlook 2024-25, Moody’s upgraded India’s growth forecast from 6.1% to 6.8% for 2024, citing strong performances in manufacturing and increased infrastructure spending as key growth drivers. India is expected to lead in growth among G-20 economies during this period.
For the fiscal year 2023-24, India’s GDP expanded by 8.2%, propelled by significant growth in sectors like manufacturing, construction, mining, and services. Moody’s highlights a moderation in headline inflation in India, primarily driven by lower food prices, although volatility remains a concern. Inflation is projected to ease to 5.2% in 2024 and further to 4.8% in 2025, down from 5.7% recorded in 2023.
In terms of monetary policy, Moody’s anticipates the Reserve Bank of India (RBI) to maintain current interest rates given challenges in achieving the 4% inflation target. During its June policy meeting, the RBI opted to keep the benchmark interest rate (repo rate) unchanged at 6.5%, reflecting a cautious stance in managing inflation pressures. Despite overall inflation moderating below 5% since March, persistently high food prices continue to pose ongoing challenges for economic stability and policy formulation.
