India emerges as the frontrunner in global economic growth, defying odds and showcasing resilience amid challenging global conditions. As the curtains draw on 2023, the nation stands poised to retain its title as the fastest-growing major economy in 2024, surpassing even economic giants like China. Let’s delve into the factors driving India’s robust economic performance and the outlook for the coming year
Current economic landscape
India’s economic prowess in 2023 becomes evident as it weathered global headwinds, recording a remarkable GDP expansion of 6.1% in the March quarter. The growth momentum continued, reaching 7.8% in the June quarter and maintaining a solid 7.6% in the September quarter. The cumulative growth for the first six months of the fiscal year stands at an impressive 7.7%.
Projections for 2024
Bolstered by growing demand, moderate inflation, a stable interest rate regime, and robust foreign exchange reserves, India is set to outpace major economies in the coming year. According to the Organization for Economic Cooperation and Development (OECD), India’s projected growth for 2023 is 6.3%, surpassing China and Brazil. Looking ahead to 2024, the OECD forecasts India to grow at 6.1%, maintaining its lead over China.
Global comparisons
In contrast, major economies like the US, UK, and Japan are anticipated to witness either deceleration or minimal increases in their economic growth rates in the next year. India’s economic performance stands out on the global stage, as the International Monetary Fund (IMF) predicts a decline in global growth from 3.5% in 2022 to 2.9% in 2024.
Insights from experts
Ashima Goyal, a member of the Reserve Bank of India’s Monetary Policy Committee (MPC), attributes India’s growth resilience to economic diversity and effective policy measures. Dharmakirti Joshi, Chief Economist at Crisil, foresees India’s GDP growing at 6.4% in the upcoming fiscal year, with potential challenges arising from geopolitical developments.
RBI’s perspective
The Reserve Bank of India (RBI) acknowledges India’s steadfast growth amidst global challenges. The RBI’s dynamic Stochastic General Equilibrium (DSGE) model projects a growth rate of 6% in the financial year 2024-25, highlighting the positive shift in the economic environment.
Inflation trends
Retail inflation, a significant economic indicator, shows a downward trajectory after reaching a peak of 7.44% in July. Despite fluctuations, inflation remains within the RBI’s comfort zone. Aditi Nayar, Chief Economist at Icra, expects inflation to moderate further, provided there is a well-distributed monsoon.
Looking ahead to 2024
As India heads into 2024, macroeconomic indicators suggest a positive outlook. The growth is expected to reach 6.5% in FY2024 and 6.2% in FY2025. The RBI’s commitment to an “actively disinflationary” policy has contributed to a stable interest rate regime, strengthening both banks and corporates.
Geopolitical considerations
The potential joker in the pack for India’s economic trajectory in 2024 lies in geopolitical factors and conflict hotspots. The resolution or escalation of ongoing conflicts will play a pivotal role in determining the growth rate.
Resilience amidst global turmoil
India’s foreign exchange reserves, crossing the USD 600 billion mark, provide a comforting cushion amid geopolitical tensions and global economic slowdown. The current account deficit shows marked improvement, narrowing to 1% of GDP in the September 2023 quarter.
Conclusion
As India navigates through the uncertainties of 2024, the nation’s economic resilience, prudent policies, and robust fundamentals position it as a beacon of stability in a volatile world. The optimism resonates not just among experts but within the hearts of millions, reflecting a nation that continues to defy economic gravity and soar to new heights.
Source: zeebiz.com | Also see: Introduction to Doing Business in India 2024: New Guide Out Now (india-briefing.com)
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