World Bank had in June projected India to grow at 6.6% for FY24. File
| Photo Credit: Reuters

The World Bank on Tuesday (September 3, 2024) raised the growth forecast for the Indian economy to 7% for the current fiscal year on the back of recovery in agri sector and rural demand.

World Bank had in June projected India to grow at 6.6% for FY24.

According to the World Bank Report released on Tuesday, India’s growth continues to be strong despite a challenging global environment.

Improvement in monsoon and private consumption have led to revising the India gross domestic product (GDP) forecast, said World Bank senior Economist Ran Li.

The growth rate of India, which accounts for the bulk of the South Asia region, is expected to remain strong at 7% in 2024-25, the World Bank said in the India Development Update.

Recovery in agriculture will partially offset a marginal moderation in industry, it said, adding that services will remain robust.

Rural private consumption will recover, thanks to the expected recovery in agriculture, the World Bank said.

The latest Fitch Ratings has cited a recovery in consumer spending and increased investment. File photo
| Photo Credit: The Hindu

Fitch Ratings on Tuesday, June 18, 2024, raised India’s growth forecast for current fiscal to 7.2 per cent, from 7 per cent projected in March, citing a recovery in consumer spending and increased investment.

For the fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 per cent and 6.2 per cent, respectively.

“We expect the Indian economy to expand by a strong 7.2 per cent in FY24/25 (an upward revision of 0.2 pp from the March GEO),” Fitch said in its global economic outlook report.

Fitch’s estimates are in line with that of RBI which earlier this month projected Indian economy to expand 7.2 per cent in the current fiscal on the back of improving rural demand and moderating inflation.

Investment to continue, consumer spending to pick up

Investments will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence, it said.

Fitch said purchasing managers survey data point to continued growth at the start of the current financial year.

It said signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though a recent heatwave poses a risk.

“We expect growth in later years to slow and approach our medium-term trend estimate,” it said, adding growth will be driven by consumer spending and investment.

The Indian economy grew 8.2 per cent in the last fiscal (2023-24), with a 7.8 per cent expansion in March quarter.

Inflation, Fitch expects, will decline to 4.5 per cent by end 2024 and average 4.3 per cent in 2025 and 2026.

Fitch said it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25 per cent.