Moody’s upgrades India’s GDP growth forecast to 7.2% for 2024

India’s GDP growth forecast has been significantly upgraded, with projections now at 7.2% for 2024 and 6.6% for 2025 after Moody’s latest ratings. This positive revision reflects strong economic expansion, improving rural demand, and rising private investment. The robust growth is supported by favorable agricultural conditions, enhanced digitalization, and a strengthening external position, positioning India as a key player in the global economy.

Moody’s Ratings has raised its GDP growth forecast for India, projecting 7.2% growth for 2024 and 6.6% for 2025. This is an increase from the previous estimates of 6.8% and 6.4%, respectively.

The ratings agency attributes this upgrade to robust, broad-based economic expansion and suggests that growth could surpass these forecasts if private consumption continues to strengthen. Moody’s notes that the economy is currently well-positioned, benefiting from strong growth and moderating inflation.

In the first quarter of 2024, India’s GDP grew by 7.8% year-over-year, despite tight monetary policies and ongoing fiscal consolidation. Moody’s also observes early signs of improved rural demand, supported by favorable agricultural conditions due to above-average monsoon rainfall.

Corporate and bank balance sheets have improved significantly, with companies increasingly turning to equity and bond markets for capital. The Reserve Bank of India (RBI) expects a 54% increase in private capital expenditures this financial year, driven by higher capacity utilization, positive business sentiment, and continued infrastructure investment.

Digitalization is also advancing rapidly, supported by government investments in digital infrastructure and affordable data usage. Moody’s highlights a recent shift in India’s external position, with a modest current account surplus for the first time in ten quarters, thanks to strong services exports and remittance inflows.

Global rating agency Fitch has also maintained India’s sovereign credit rating at ‘BBB-‘ with a stable outlook citing its strong medium-term growth outlook, solid external finance position and strengthening fiscal credibility.