India to emerge as the fastest-growing G20 economy in 2024

Recent upward revisions in India’s growth projections by S&P, Morgan Stanley, and Moody’s signal a promising outlook for the nation’s economy. S&P raised its growth forecast from 6.4% to 6.8%, Morgan Stanley from 6.1% to 6.8%, and Moody’s from 6.6% to 8% for the current fiscal period.

These adjustments reflect growing optimism – both domestically and globally – fuelled by robust manufacturing and infrastructure spending. These revisions tie in with the current trajectory of India which places it as a leader of the G-20 economies in terms of economic growth that has been propelled by strong government expenditure and domestic consumption.

The Finance Minister recently stated that India is expected to grow by over 8 % between January and March 2024. The nation has emerged to become the 5^th largest global economy and the government plans on growing it into the 3^rd largest one in the world by 2027.

Under the leadership of Prime Minister Modi, the administration’s significant increase in capital expenditure – from 2% of GDP nine years ago to 3.8% in the interim budget of 2024 – underscores the commitment to economic expansion. With Rs 11.11 lakh crore allocated for capital expenditure, the government aims to sustain growth momentum by marking an 11.1% increase from the previous budget.

S&P attributes the upward revision to India’s growth forecast to a better-than-expected start to the year, supported by a favourable global economic environment and anticipated easing of domestic financial conditions. The firm also revised India’s FY24 forecast to 7.3% and projected a decline in inflation to 5.1% in FY25.

Although the government’s latest forecast stands at 7.6% for FY24, recent growth figures and the finance minister’s assertion of GDP growth exceeding 8% in the current fiscal year prompt reconsideration of India’s growth narrative by rating agencies.

Source: Economic Times