NEW DELHI: India continues to be the fastest-growing major economy, with positive assessments of the growth outlook for the current financial year for India by international organisations and the central bank, finance ministry said Thursday in its monthly economic review report.
“Factors such as strong domestic demand, rural demand pickup, robust investment, and sustained manufacturing momentum have contributed to India’s resilience. Projections by RBI and IMF forecast high growth rates for India, further reinforcing its positive outlook,” the ministry said.
In its April 2024 World Economic Outlook (WEO), the IMF increased its projection for India’s real GDP growth in FY24 to 7.8%, up from 6.7% in January 2024 and 6.3% in October 2023. According to the report, the global economy is gradually recovering, with diminishing recession concerns and improving growth in key economies.
Yet, regional variations exist, with certain areas facing subdued economic conditions. Despite these disparities, leading indicators point towards a general economic upswing fuelled by growth in manufacturing and service sectors.
As per the report, globally, managing inflation remains crucial. In India, retail inflation in FY2023-24 dropped notably to its lowest point post the Covid-19 crisis. Consequently, the RBI’s Monetary Policy Committee decided to maintain current policy rates, emphasizing the need to further reduce inflation to stabilize it at the 4% target consistently. The RBI has projected retail inflation at 4.5% for FY 25.
The report highlighted that India’s exports narrowed on account of slowdown in demand in developed economies and decrease in global commodity prices.
“The slowing of trade has resulted in the merchandise trade deficit narrowing in FY2023-24, as exports have shown a smaller contraction than imports. However, the non-petroleum and non- gems & jewellery merchandise exports have shown resilience with a sustained uptick in the last few months, growing at 3 per cent in FY2023-24,” the reported stated.
Retail inflation in FY24 drops substantially
In India, retail inflation in FY24 dropped notably to its lowest point post Covid19. Consequently, the RBI’s MPC decided to maintain current policy rates, emphasizing the need to further reduce inflation to stabilize it at the 4% target consistently. The RBI has projected retail inflation at 4.5% for FY25