Rating agency Moody’s has predicted an increase in the country’s economic growth.
Every developed country in the world, which is currently in the grip of recession or is going to be in the grip of recession, has become convinced of the speed with which India’s GDP is growing. There are some countries which are unlikely to be hit by recession, but the wheels of the economy are not running at the same pace. Everyone is aware that the economy of Germany, one of the largest countries in Europe, has fallen into recession. The economic figures of America, the world’s largest super power, are not that good. Even if it is far from recession. But both the countries have become convinced of the speed of India’s economy.
Looking at the figures of the third quarter, no one is able to believe that India’s growth rate has exceeded 8 percent. For this reason, American economic agencies have increased India’s growth estimates for the entire year. A few days ago, Deutsche, one of the largest banks in Germany, had increased the estimates of India’s economic growth. This time America’s Moody’s has increased. Let us try to understand from the figures that by how much has Moody’s increased its estimates?
Moody’s increased estimates
Rating agency Moody’s on Monday increased India’s GDP growth forecast for fiscal year 2024 from 6.1 percent to 6.8 percent. India’s GDP for the December quarter has exceeded all estimates around the world. Reuters, citing two government officials, said this was due to a sharp decline in subsidies that boosted GDP. During the October-December quarter, India’s economy grew at the rate of 8.4 percent, which is the fastest in one and a half years. Whereas in the Reuters survey the speed was estimated at 6.6 percent.
What will be the pace in 2025?
Moody’s said in its Global Macroeconomic Outlook-2024 that India’s economy has performed well and due to stronger than expected data in 2023, we have increased our growth forecast for 2024 from 6.1 percent to 6.8 percent. India will remain the fastest growing economy among the G-20 countries. Moody’s said that India’s GDP growth rate is estimated to be 6.4 percent in 2025. The rating agency said high-frequency indicators suggest that the economy’s strong momentum from the September and December quarters continues into the March quarter of 2024.
Why did the speed increase?
Moody’s said strong GST collections, rising vehicle sales, consumer confidence and double-digit loan growth show that urban demand remains strong. Talking about the supply side, the expansion of manufacturing and service PMIs is evidence of solid economic momentum. In this year’s interim budget, the allocation for Capex has been kept equal to Rs 11.1 lakh crore or 3.4 percent of the GDP for 2024-25. This is 16.9 percent more than the estimate for 2023-24. Moody’s said that we are expecting continuity on the policy front after the general elections. Apart from this, we believe that the work of taking forward basic infrastructure will continue.
There are elections in G20 countries
The rating agency said that although the growth of private industrial capital expenditure has been slow, it is expected to pick up due to the benefits of supply chain diversification and investor response to the government’s production linked incentive (PLI) schemes. The year 2024 is an election year for many G20 countries like India, Indonesia, Mexico, South Africa, Britain and America. Moody’s said that the impact of the elections is visible beyond limits. Moody’s said that the leaders who will be elected in these elections will have an impact on domestic and foreign policies in the next four to five years.
Subsidy not included in GVA
However, GVA, which does not include indirect taxes and subsidies, has seen an increase of 6.5 percent, due to which economists were forced to say that the GDP data has exaggerated the growth trend. A senior government official on Friday said the wide gap between GVA and GDP in the October-December quarter was mainly due to a sharp decline in subsidies in that quarter, mainly due to lower payments on fertilizer subsidies like urea.
Estimated growth of 7.6 percent in the year
Reuters quoted city economist Samiran Chakraborty as saying that real GDP above 8 per cent should be read with caution given the large gap with GVA, decline in agri activity and 2-paced economic growth (investment far exceeds consumption). Needed India’s GDP growth rate for the year ending March 31, 2024 is estimated at 7.6 percent. Economists said that due to increase in investment, there has been a rise in growth. This investment has increased at the rate of 10.6 percent in the third quarter.
German bank had estimated
A few days ago, the estimate made by German brokerage company Deutsche Bank for the December quarter was more than 7 percent. Whereas India’s GDP has been seen to be more than 8 percent. The estimate he has made for the entire financial year is 7 percent. If experts are to be believed, this estimate of Deutsche will also be left behind. It is possible that Deutsche may again revise and increase its India estimates in the coming days. Now all eyes are on IMF and World Bank. It is being estimated that both may increase India’s estimates in the coming days.