Data reveals growth in Indian Economy- A ray of hope

~This Article has been written by Team Writ Review.

Recent economic growth forecasts from international financial institutions signal optimism for the Indian economy. Positive announcements in the Union Budget regarding foreign investment, coupled with these forecasts, offer hope for sustained growth.

The Asian Development Bank (ADB) predicts the Indian economy will grow by 7.0% in FY2024 and 7.2% in FY2025, driven by robust services, manufacturing, and construction demand. Agriculture is expected to rebound, especially with a favorable monsoon, supporting rural growth. Strong public investment and bank credit are fueling housing and private investment demand, though merchandise exports may lag behind service exports. The government’s strong fiscal position could boost growth, but risks like adverse weather and geopolitical shocks remain.

The International Monetary Fund (IMF), in its July 2024 update of the World Economic Outlook (WEO), revised India’s growth forecast to 7.0% for 2024, citing improved private consumption in rural areas. This marks a 0.2 percentage point increase from April 2024 projections. The growth forecast for 2025 remains at 6.5%. IMF noted India’s significant contribution to global growth, accounting for about 1/6 of total global growth, with inflation returning to the target range. However, global inflationary pressures and rising interest rates pose challenges to achieving price stability.

Moody’s Ratings kept India’s economic growth forecast for 2024 at 6.8%, projecting 6.5% growth for 2025. Moody’s noted robust domestic and international demand driving growth in emerging markets, including India. The agency raised its growth forecast in March 2024 from 6.1% to 6.8%, citing strong manufacturing activity and infrastructure spending, positioning India as the fastest-growing G-20 economy over the forecast horizon.

The Union Budget introduced measures to simplify Foreign Direct Investment (FDI) regulations, promote overseas investments using the Indian Rupee, and attract foreign capital by reducing corporate tax rates on foreign companies. Additionally, it abolished the angel tax for all investors and de-penalized the non-reporting of small foreign assets. Other initiatives aimed to boost cruise tourism and the diamond-cutting industry, reflecting the government’s focus on bolstering sectors with growth potential.

Overall, the combination of favorable growth forecasts, policy reforms, and investment incentives paints a positive outlook for India’s economic trajectory in the coming years.