NEW DELHI: Rating agency Moody’s on Thursday raised India’s GDP growth forecast for FY24 to about 8% from 6.6% on the back of strong domestic consumption and capital expenditure.
“We expect India to be the fastest-growing economy among major G20 countries, with its real GDP growth to accelerate to around 8% in the fiscal year ending March 2024 (fiscal 2023-24) from 7.0% in fiscal 2022-23,” it said.
Government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China.
The agency also said the outlook for India’s banking system is positive, and that it expects the operating environment for banks to improve as government capital expenditure and robust domestic demand underpin India’s strong economic growth, which will support credit growth. It also expects strong government support for banks in times of need.
“Banks’ asset quality will continue to improve, along with the operating environment. At the same time, banks will continue to maintain sufficient levels of loan-loss reserves,” the rating agency said in a report. The rating agency, however, said impairments of unsecured retail loans could increase as they have grown rapidly in the past two years while interest rates have risen.