International rating agency Moody’s on Thursday raised India’s economic growth forecast to 8% for FY24 from 6.6% on the back of strong domestic consumption and capital expenditure by the government.
On Wednesday, RBI governor Shaktikanta Das said the real GDP growth likely to exceed the government’s second advance estimate of 7.6% for FY24 and move closer to 8%.
“We expect India to be the fastest-growing economy among major G20 countries, with its real GDP growth to accelerate to around 8% in the fiscal year ending March 2024 from 7% in fiscal 2022-23,” Moody’s said in a report.
Government capital expenditure and strong domestic consumption will underpin India’s economic growth, it said.
“Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China,” the agency said.
“We expect India’s inflation rate will decline to 5.5% in fiscal 2023-24 from a peak of 6.7% in fiscal 2022-23, and further disinflation will support monetary easing going forward.”
The agency said Indian banks’ nonperforming loan (NPL) ratios will continue to fall as the operating environment improves. The systemwide NPL ratio dropped to 3.2% as of the end of September 2023 from a peak of 11.2% at the end of March 2018 because of recoveries and write-offs of legacy problem loans.