Delhi- Moody’s Ratings on Friday projected 7.2 percent GDP growth for India in 2024, saying the Indian economy is in good shape, but the RBI may maintain a relatively tight monetary policy this year due to inflation risks. Moody’s said that despite the near-term rise, retail inflation should remain moderate in the coming months in line with the Reserve Bank’s target as food prices decline amid increased planting and adequate food reserves. food grains. Retail inflation hit a 14-month high of 6.21, crossing the RBI’s tolerable upper limit, due to a sharp jump in vegetable prices. The agency said the deflationary trajectory remains unstable due to sporadic pressures on food prices.
“Potential risks to inflation from rising geopolitical tensions and extreme weather events underscore the RBI’s cautious approach toward policy easing,” Moody’s said. Although the central bank maintained its neutral monetary policy stance in October, keeping the repo rate stable at 6.5 percent, it is also likely to maintain a relatively tight monetary policy next year, given the growth dynamics and downside risks. inflation are largely healthy.” The RBI’s Monetary Policy Committee that sets interest rates is scheduled to meet next month and with inflation on the rise, the RBI is unlikely to cut benchmark interest rates.
In its Global Macro Outlook 2025-26, the US-based rating agency said domestic consumption is likely to grow, driven by higher spending during the ongoing festive season and sustained growth in rural demand. In addition, increasing capacity utilization, optimistic business sentiment and the. The government’s continued push for infrastructure spending is expected to support private investment. India’s real GDP is expected to grow 6.7 percent year-on-year in the second quarter of 2024, driven by improving domestic consumption, strong investment and strong manufacturing activity. There are also signs of stable economic momentum in the July-September quarter.
Moody’s said: “…from a macroeconomic perspective, the Indian economy is in a good position with a combination of strong growth and moderate inflation. “We estimate growth of 7.2 percent for calendar year 2024, followed by 6.6 percent in 2025 and 6.5 percent in 2026.” He said strong economic fundamentals, including strong corporate and bank balance sheets, strong external position and adequate foreign exchange reserves, also bode well for growth prospects.
Moody’s said the global economy has shown remarkable resilience in recovering from supply chain disruptions during the pandemic, energy and food crises after the start of the Russia-Ukraine war, high inflation and subsequent policy tightening. monetary. “Most G-20 economies will experience stable growth and continue to benefit from policy easing and supportive commodity prices,” said Madhavi Bokil, senior vice president at Moody’s Ratings and author of the report. “However, post-election changes in US domestic and international policies could accelerate global economic fragmentation, complicating ongoing stabilization.”
