Correct Answer :   6.8%

The International Monetary Fund (IMF) on Tuesday (16th April 2024) raised India’s GDP growth projection for 2024-25 by 30 basis points to 6.8 per cent in its update to the World Economic Outlook (WEO), citing buoyant domestic demand. However, the fund’s estimate is below the 7 per cent growth projection by the government.

“Growth in India is projected to remain strong at 6.8 per cent in 2024 (FY25) and 6.5 per cent in 2025 (FY26), with the robustness reflecting continuing strength in domestic demand and a rising working-age population,” the IMF said in its report. For India, according to the report, data and forecasts are presented on a financial year basis.

For FY24, the IMF raised India’s GDP growth projection to 7.8 per cent, compared to 6.7 per cent in its January report. For FY26, the IMF expects the country’s economic growth to slow down slightly to 6.5 per cent -- the same as projected in its January update.

According to the second advance estimates by the National Statistical Office, the growth rate of GDP during 2023-24 was estimated at 7.6 per cent, compared to a growth rate of 7 per cent in 2022-23.

Rating agencies, including Fitch and Barclays, recently revised India’s GDP growth projection for FY24 to 7.8 per cent due to strong domestic demand and persistent growth in business and consumer confidence levels.

The finance ministry in its last monthly economic report (for February) said that strong growth accompanied by stable inflation and external account, and progressive employment outlook would help the Indian economy close FY24 on a positive note. “There are headwinds like indications of hardening crude oil prices and global supply chain bottlenecks to trade. Nonetheless, India, on the whole, looks forward to a bright outlook for FY25,” it said.

On inflation, the fund projected India’s consumer price inflation declining from an average of 5.4 per cent in FY24 to 4.6 per cent in FY25, and further to 4.2 per cent in FY26..


Source : Business Standard

Correct Answer :   0.53%

March 2024 witnessed a positive inflation rate of 0.53% in India’s Wholesale Price Index (WPI) compared to March 2023. This inflation was primarily attributed to increased prices in food articles, electricity, crude petroleum & natural gas, machinery & equipment, and other manufacturing sectors.

Month-over-Month Change in Major Groups of WPI :

1. Primary Articles (Weight 22.62%) :  
2. Fuel & Power (Weight 13.15%) :  
3. Manufactured Products (Weight 64.23%) :
4. WPI Food Index (Weight 24.38%) :

Correct Answer :   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 :   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 :   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.

Correct Answer :   7%

Fitch Ratings has raised India’s growth forecast for FY25 to 7%, up from the previous estimate of 6.5%. The upgrade is attributed to robust domestic demand and sustained growth in business and consumer confidence, following a strong 8.4% expansion in Q3FY24.

Reasons for Forecast Upgrade :

Inflation Expectations :

Monetary Policy Forecast

Correct Answer :   5.09%

Retail inflation in February 2024 saw a decline to a four-month low of 5.09 per cent, remaining well within the Reserve Bank of India’s comfort zone of 6 per cent for the sixth consecutive month.

While the overall inflation figure remained relatively steady compared to January, certain items within the food basket experienced price increases.

Food Basket Inflation :

* The inflation rate within the food basket saw a marginal uptick, rising to 8.66 per cent in February from 8.3 per cent in the previous month.
* Notably, prices of specific items such as vegetables, fruits, oils and fats, and pulses and products witnessed a slight decrease on a month-on-month basis.
* Conversely, the rate of price escalation was higher in segments including cereals and products, meat and fish, and milk and products.

Weightage of Food Basket :

* The food basket holds significant importance, accounting for nearly 50 per cent weightage in the Consumer Price Index (CPI). This underscores the substantial impact of food prices on overall inflation trends.

Correct Answer :   7% and 6.8%

UBS anticipates a moderation in India’s real GDP growth for fiscal years 2025 and 2026, projecting rates of 7% and 6.8%, respectively. Despite this, India is expected to maintain its position as one of the fastest-growing global economies. The report highlights the continuation of growth momentum in the first three quarters of fiscal year 2024, driven by cyclical recovery and structural improvements.

GDP Growth Projection

* Real GDP growth expected to moderate to 7% and 6.8% in FY25 and FY26 respectively.
* Positive surprises noted in India’s GDP growth, averaging above 8% in the first three quarters of FY2024.
* Expectation of moderation attributed to global factors such as weaker growth and local factors like softness in public capex.

Sector-wise Analysis :

* Anticipated moderation in investment-led growth due to lower public capex.
* Gradual recovery expected in consumption growth driven by rural growth recovery, relying on expectations of a normal monsoon as projected by IMD.

Equity Market Outlook :

* Expectation of near-term volatility in the Indian equity market due to elevated geopolitical and economic risks.
* Manageable downside risks amid supportive domestic macro and micro environment.
* Reversal of rate cycle could provide valuation support as equity risk premium falls.
* Investors advised to utilize steep market corrections as buying opportunities, favoring domestic economy linked sectors for long-term structural growth opportunities.

Correct Answer :   6.8%

Crisil Ratings predicts India’s economy to expand by 6.8% in FY25, with significant growth potential driven by domestic reforms and cyclical factors. By 2031, India aims to double its economy to $7 trillion and achieve upper-middle-income status.

GDP Growth Trajectory :

* India’s GDP growth expected to moderate to 6.8% in FY25 from the current fiscal year’s 7.6%.
* Structural reforms and cyclical levers to support continued growth, potentially positioning India as the third-largest economy by 2031.

Economic Outlook :

* IMF projects India to reach $5 trillion economy by 2027-28.
* India, presently the fifth largest economy globally, aims for $7 trillion GDP by 2031, elevating it to upper-middle-income status.

Per Capita Income Projection :

* By fiscal 2031, India’s economy anticipated to reach $6.7 trillion, raising per capita income to $4,500.
* This transformation would align India with upper-middle-income countries as defined by the World Bank, marking a significant economic milestone.

Correct Answer :   6.8%

Moody’s, the global credit rating agency, has raised its GDP forecast for India in 2024 to 6.8%, reflecting a positive economic outlook. This revision is based on India’s position as the fastest-growing economy among G20 nations, supported by robust growth prospects and policy continuity.

Factors Driving India’s Economic Growth :

1. Strong Growth Trajectory : India’s consistent growth trajectory contributes significantly to its economic prospects.
2. Stable Inflation : The country’s stable inflation rate further supports its economic stability and growth potential.
3. Policy Continuity : Moody’s expects policymakers to maintain continuity in their economic policies, providing a conducive environment for sustained growth.

Projections for 2025

1. Continued Momentum : Moody’s projects India’s GDP growth momentum to persist into 2025, with a forecasted growth rate of 6.4%.

Role of Reserve Bank of India (RBI)

1. Policy Stability : The agency anticipates the RBI to maintain its policy rate, offering additional support for economic stability and growth momentum.

Government’s Economic Vision

1. Sustainable Growth : The government aims to foster sustainable economic growth and address critical infrastructure gaps across sectors, aligning with its long-term vision.

Investor Confidence and International Optimism

1. Resilience Amid Uncertainties : Moody’s upward revision underscores growing investor confidence and international optimism about India’s ability to navigate challenges and leverage opportunities for sustained growth.