December 5, 2024
The OECD has revised India’s FY26 growth forecast to 6.9%, up from 6.8% projected in September 2024
Strong public infrastructure spending and vigorous credit growth are driving private investment and economic resilience
Inflation is expected to ease gradually, declining to 4.8% in FY25 and reaching 4% by FY27, creating room for monetary policy adjustments
The OECD highlighted ongoing reforms as critical for India to achieve advanced economy status by 2047
India’s economy is set to grow at a steady pace of nearly 7% over the next two years, as outlined by the Organisation for Economic Co-operation and Development (OECD) in its latest economic outlook released on 4 December. This forecast reflects strong public and private investments, recovering agricultural output, and improving rural incomes buoyed by a favourable monsoon.
The OECD revised its growth projection for India, estimating an average growth of 6.8% over the next three years. It also increased the FY26 growth forecast to 6.9%, from 6.8% in its earlier outlook. These predictions come despite a recent slowdown in economic growth, which dipped to a seven-quarter low of 5.4% in the second quarter, raising concerns about meeting the annual target of 6.5%.
According to the OECD, increased public infrastructure spending and accelerated credit growth are key contributors to India’s resilient economic performance. Meanwhile, easing inflation, driven by recovering farm output, is expected to create room for monetary policy adjustments. Inflation rates are forecast to decline to 4.8% in FY25 and continue easing to 4% by FY27.
While the outlook is optimistic, the organisation emphasised the need for continued reforms to achieve India’s goal of becoming an advanced economy by 2047. Fiscal prudence and a declining general government deficit and public debt levels further support the nation’s economic stability despite higher public investments.
On the global front, the OECD predicted an average growth of 3.3% over the next three years, citing risks from geopolitical tensions and high public debt ratios. The organisation underscored the importance of calibrated monetary policies to manage inflation and safeguard macroeconomic stability.
Source: Moneycontrol