New Delhi. India’s gross domestic product (GDP) growth rate rose to 8.2% for the financial year 2023-24, from 7% in the previous fiscal, according to official data released on Friday. The economy grew at an annual rate of 7.8% in the March 2024 quarter, as against 6.2% in the same quarter last year. However, this reflects a slowdown from the 8.6% growth rate recorded in the October-December 2023 quarter. GDP represents the total value of final goods and services produced within a country’s borders in a specific period. According to the National Statistical Office (NSO), the GDP growth rate for the entire financial year 2023-24 stood at 8.2%, up from 7% in 2022-23. The NSO’s second advance estimates had projected a growth rate of 7.7% for the financial year 2023-24. For comparison, China’s economic growth rate for the January-March quarter was 5.3%.
Moody’s forecasts 6.8% GDP growth for this year
Moody’s Ratings has projected GDP growth of 6.8% for India in 2024 and 6.5% in 2025 due to strong economic growth and expected policy continuity after the elections. India’s real GDP is expected to grow 7.7% in 2023 from 6.5% in 2022, thanks to strong government capital expenditure and robust manufacturing activity. “We believe the Indian economy should grow at six to seven per cent. We estimate growth this year to be around 6.8%,” Moody’s said.
Government will continue spending on infrastructure
Moody’s said strong, broad-based growth can be sustained with policy continuity after the general elections. The interim budget for fiscal year 2024-25 has set aside ₹11.1 lakh crore for capital expenditure, at 3.4% of GDP, higher than the 16.9% estimate for 2023-24. The agency expects a continued focus on infrastructure development and an increase in private industrial capital expenditure due to the government’s production-linked incentive (PLI) scheme aimed at diversifying supply chains and boosting targeted manufacturing industries.
Inflation and Monetary Policy
Despite sporadic pressures on food prices, the overall and core inflation rates fell to 4.8% and 3.2%, respectively, in April, down from record highs of 7.8% and 7.1% in 2022. The Reserve Bank of India (RBI) maintained the repo rate at 6.5% in April, unchanged since February 2023. Moody’s commented, “Given strong growth dynamics and inflation above the 4% target, we do not expect any easing of policy rates in the near future.”