Correct Answer : Option (A) - 6.1%

Moody’s Analytics projects a modest uptick in India’s economic growth for 2024, estimating a 6.1% expansion, slightly higher than the 6% projected earlier in March. Despite the growth, it remains lower than the 7.7% recorded in 2023. The report highlights concerns regarding inflation, citing India’s recent consumer price inflation hovering around 5% with no clear evidence of abating pressure.

Inflation Dynamics and RBI’s Outlook :

Moody’s Analytics underscores the persistent challenge of inflation across the Asia-Pacific (APAC) region, with uncertain trends. The Reserve Bank of India (RBI) maintains a cautious stance, particularly regarding food prices, and projects a retail inflation rate of 4.5% for the fiscal year 2024-25. Geopolitical tensions further complicate the inflation outlook, with risks to commodity prices and supply chains.

Economic Performance and Post-Pandemic Rebound :

The report assesses the economic landscapes of major APAC economies, noting a divergence in domestic demand dynamics. While China and Japan face hurdles due to weak internal demand, India and ASEAN economies benefit from a delayed but improving post-pandemic rebound. However, the output in India remains below pre-pandemic levels by 4%, indicating ongoing recovery challenges from various disruptions, including supply chain issues and geopolitical conflicts.

Regional Comparisons and Recovery Trajectories :

Moody’s Analytics places the recovery of India and Southeast Asia in the context of broader regional and global trends. Despite significant output losses compared to pre-pandemic trajectories, the Asia-Pacific region demonstrates resilience, with a forecasted growth of 3.8% in 2024, outpacing the global economy’s projected 2.5% growth.

Correct Answer : Option (B) - 7%

The Asian Development Bank (ADB) has raised India's GDP growth forecast for FY25 to 7% from the previous estimate of 6.7%, citing robust investment in public and private sectors and improving consumer demand as key drivers of growth.

Correct Answer : Option (D) - 6.8%

Morgan Stanley has increased its GDP growth forecast for India for the financial year 2024-25 (FY25) to 6.8%, up from the previous estimate of 6.5%. This revision reflects a positive outlook on India’s economic trajectory, emphasizing its strength and stability in the current cycle. The firm also revised its growth forecast for the ongoing financial year, FY24, to 7.9%.

Economic Outlook and Monetary Policy :

Optimistic Trajectory : Morgan Stanley anticipates a shallow easing cycle in monetary policy, driven by continued traction in industrial and capital expenditure activities.

Growth Projection :

Robust Growth Momentum : India’s GDP growth is expected to track around 7% in the fourth quarter of FY23-24 (QE Mar-24), with broad-based growth across rural-urban consumption and private-public capital expenditure.

Inflation Trends :

Favorable Inflation Trajectory : Recent trends indicate a softening in headline inflation, with moderation in food inflation and core inflation. The firm expects headline inflation to average 4.5% in FY25 and core inflation to remain muted at 4.1%.

Factors Affecting Growth :

Global and Domestic Risks : Morgan Stanley highlights potential risks from slower-than-expected global growth, higher commodity prices, and tighter global financial conditions. Domestically, factors such as central elections and changes in policy mix warrant close monitoring.

Supply Chain and Commodity Prices :

Disinflation Trend: Supply-chain normalization and easing commodity price pressures are expected to contribute to a disinflation trend in the coming period.