Indian Economy GDP growth seen at 7.5% in 2024! The World Bank has projected that the Indian economy is set to grow at 7.5 per cent in 2024, marking a revision from its previous forecast by 1.2 per cent. This growth is part of a strong outlook for South Asia, with the region expected to grow at 6.0 per cent in 2024, driven by India’s strong growth and recoveries in Pakistan, and Sri Lanka.
According to a PTI report, the World Bank’s South Asia Development Update states that South Asia is poised to maintain its status as the fastest-growing region globally for the next two years, with a projected growth of 6.1% in 2025.
The World Bank has highlighted that India will be a major contributor to the region’s economy and it is expected to see output growth of 7.5% in FY 2023-24, followed by a moderate decrease to 6.6% in the medium term. According to the World Bank, activity in services and industry is expected to remain robust.
The report also mentions positive signs in Bangladesh and Sri Lanka, with expected growth rates of 5.7% and 2.5% respectively.
Martin Raiser, Vice President for South Asia at the World Bank has expressed optimism about the region’s growth prospects in the short term but has cautioned about challenges such as fiscal vulnerabilities and climate risks.
Franziska Ohnsorge, Chief Economist for South Asia at the World Bank, emphasized the need for policies to enhance private investment and employment growth to leverage the demographic dividend.
India’s economic performance in Q4 of 2023 exceeded expectations, with a growth rate of 8.4% driven by investments and government spending. The country’s composite Purchasing Managers Index (PMI) stood at 60.6 in February, well above the global average, indicating a strong expansion. Inflation in India has been within the Reserve Bank’s target range, supported by stable policy rates since February 2023.
Financial conditions in India have remained favorable, with domestic credit issuance growing by 14% year-on-year in December 2023. The nonperforming-loan ratio has decreased to 3.2%, and regulatory capital adequacy has surpassed requirements. Despite a decline in FDI, foreign portfolio investments have increased, leading to a rise in foreign reserves.
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Looking ahead, the World Bank projects India’s output growth to reach 7.5% in FY 2023-24, followed by a moderation to 6.6% in FY 2024-25. The slowdown is attributed to a decrease in investment growth from the previous year’s high levels. However, the bank expects robust growth in services and industry sectors, supported by construction and real estate activities.
In the medium term, the report forecasts a decline in fiscal deficit and government debt, backed by strong output growth and government consolidation efforts. The overall outlook suggests a positive trajectory for India’s economy, with the potential for growth dividends from public investments in the coming years.
