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The World Bank has raised its growth forecast for India’s economy to 7 per cent for the current financial year (FY25), up from an earlier projection of 6.6 per cent, according to a statement released on Tuesday. This revision comes amidst expectations of stronger economic performance, driven by key factors such as private consumption and investment.
IMF forecasts 7 per cent growth in India for FY25
The update aligns with similar optimism from the International Monetary Fund (IMF), which in July also revised its growth projection for India’s gross domestic product (GDP) for the financial year 2024-25, increasing it by 20 basis points to 7 per cent. The IMF cited a notable boost in private consumption, particularly in rural areas, as a primary driver for this upward revision.
“The forecast for growth in India has … been revised upward … with the change reflecting carryover from upward revisions to growth in 2023 …,” the IMF’s World Economic Outlook (WEO) update stated. The IMF’s previous estimate, made in April, had anticipated a slower growth rate of 6.5 per cent for FY26, a projection which remains unchanged.
Despite these positive adjustments, data from the National Statistical Office (NSO) highlighted a slight slowdown in GDP growth during the April-June quarter of this year. Growth decelerated to 6.7 per cent due to reduced government spending, attributed to the enforcement of a Model Code of Conduct ahead of the general elections. This marked a deceleration from the previous financial year’s robust expansion, where GDP grew at 8.2 per cent, driven by a better-than-expected growth rate of 7.8 per cent in the final quarter of FY24.
The Reserve Bank of India (RBI) has also projected the Indian economy to grow at 7.2 per cent for FY25.
First Published: Sep 03 2024 | 12:36 PM IS
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