Updated January 8th, 2024 at 13:21 IST

India to remain fastest-growing major economy in 2024

Major economies such as the US, UK, and Japan are expected to experience either a slowdown or minimal growth in the forthcoming year.

Reported by: Business Desk
Rupee | Image:Unsplash
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Despite facing considerable global challenges in 2023, India has sustained its position as the world's fastest-growing major economy, driven by rising demand, controlled inflation, consistent interest rates, and substantial foreign exchange reserves.

India's GDP demonstrated resilience by expanding by 6.1 per cent in the March quarter, followed by 7.8 per cent and 7.6 per cent growth in the subsequent quarters. The cumulative growth for the first half of the fiscal year stood at 7.7 per cent.

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Projections from the Organisation for Economic Cooperation and Development (OECD) indicate that India will achieve a growth rate of 6.3 per cent in 2023, surpassing China's 5.2 per cent and Brazil's 3 per cent. For 2024, the OECD anticipates a growth rate of 6.1 per cent for India and 4.7 per cent for China.

Contrastingly, major economies such as the US, UK, and Japan are expected to experience either a slowdown or minimal growth in the forthcoming year.

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Ashima Goyal, a member of the Reserve Bank of India's Monetary Policy Committee (MPC), highlighted India's economic resilience, attributing it to increased economic diversity and effective policy measures. She also emphasised the importance of enhancing skills and assets for sustained growth beyond 2024.

Dharmakirti Joshi, Chief Economist at Crisil, indicated that geopolitical factors could challenge India's domestic demand in the upcoming year, projecting a GDP growth rate of 6.4 per cent for the next fiscal year.

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Recent reports from the Reserve Bank of India (RBI) underscored India's economic strength, citing positive consumer confidence and income perceptions. The RBI's DSGE model forecasts a growth rate of 6 per cent for the financial year 2024-25, with inflation expected to moderate.

Retail inflation has followed a fluctuating trajectory throughout the year, with November figures at 5.55 per cent, aligning with the RBI's comfort zone. Aditi Nayar, Chief Economist at Icra, anticipates further moderation in inflation, contingent upon favourable monsoon conditions.

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Maintaining an "actively disinflationary" stance, the RBI has retained the repo rate at 6.5 per cent since February. This stability has fortified the financial positions of banks and corporates.

Looking ahead, the RBI may consider a rate reduction in 2024 if inflation remains within the 2 to 6 per cent range and global geopolitical tensions, including conflicts in regions like Russia-Ukraine and Israel-Gaza, do not escalate unexpectedly.

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Ranen Banerjee, Partner at PwC India, suggested that India's growth rate could range between 6.3 per cent and 6.6 per cent in 2024, contingent upon geopolitical developments. He also highlighted India's robust foreign exchange reserves, which surpassed USD 600 billion in December, as a stabilising factor amid global uncertainties.

Furthermore, India's current account deficit significantly improved, narrowing to 1 per cent of GDP in the September 2023 quarter from 3.8 per cent in the previous year.

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(With PTI inputs)

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Published December 31st, 2023 at 11:48 IST