Moody’s Ratings has revised its real GDP growth forecast for India, raising it to 7.2% for the financial year 2024, up from a previous estimate of 6.8%, and to 6.6% for 2025, from an earlier projection of 6.4%. The upgrade is attributed to strong, broad-based growth fueled by resilient private consumption and improved business conditions. The Indian economy grew by 7.8% year-over-year in Q1 2024, despite tight monetary policy and fiscal consolidation efforts.
The economy’s robust performance is largely driven by strong private consumption and improved business sentiment. Both the industrial and services sectors have shown significant growth, with the Purchasing Managers’ Index (PMI) for services remaining above 60 since the beginning of the year.
Moody’s also highlighted the ongoing strengthening of the capital expenditure (capex) cycle, supported by rising capacity utilization and continued government infrastructure spending. Household consumption is expected to rise as inflation eases towards the Reserve Bank of India’s (RBI) target, particularly with rural demand showing signs of revival due to a strong monsoon season.
Over the long term, sustaining 6%-7% growth will depend on effectively utilizing India’s young workforce. With a median age of 28 and two-thirds of the population in the working-age group, India has a unique demographic advantage. However, the success of employment generation and skill development policies will be crucial.
Nonfinancial corporate and bank balance sheets are healthier than before the pandemic, with firms increasingly accessing equity and bond markets for capital. While manufacturing growth has been modest over the last decade, improvements in the domestic operational climate and favorable global trends suggest promising opportunities for the sector’s future.
Founded: 1909
Headquarters: New York City, USA
Type: Credit Rating Agency
Parent Company: Moody’s Corporation
Global Reach: Operates in over 40 countries
Ratings Scale: Ranges from AAA (highest quality) to C (lowest quality, high risk of default).
Notable Influence: Considered one of the “Big Three” credit rating agencies, alongside Standard & Poor’s (S&P) and Fitch Ratings.
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