India’s Economic Growth Forecast for 2024

December 12, 2024

The Reserve Bank of India (RBI) has recently revised its growth forecast for 2024-25 and estimate stands at 6.6%. In contrast, S&P Global maintains a slightly higher projection of 6.8%, marking differing perspectives on India’s economic trajectory.

Current Economic Landscape

India’s economy grew by 8.2% in the previous financial year. However, growth slowed to 5.4% in the July-September quarter of 2024. This slowdown has prompted several agencies to adjust their annual growth forecasts downwards. The government views the weaker second-quarter performance as a temporary setback.

S&P Global’s Forecast

S&P Global anticipates steady growth in 2025. The agency cites strong urban consumption and growth in the services sector as key drivers. Ongoing infrastructure investments will also contribute positively. Their growth predictions are 6.8% for 2024-25 and 6.9% for 2025-26.

Monetary Policy Committee

The next meeting of the Monetary Policy Committee (MPC) is scheduled for February. This will be the first meeting under new Governor Sanjay Malhotra. Experts expect potential interest rate cuts after 11 consecutive meetings without change. A slight easing of monetary policy might occur in 2025, especially if inflation trends downward.

Risks to Economic Growth

Several risks could impact the 6.8% growth forecast. Challenges in the manufacturing sector present concerns. Weak agricultural growth and lingering pandemic effects on finances are additional risks. These factors could hinder overall economic performance.

Improvements in urban infrastructure and technology are vital. Enhanced job quality could attract more individuals into the workforce. Stronger public and household finances will also support economic growth. These elements combined could lead to a more robust economic recovery in the coming years.

GKToday Facts for Exams:
MPC – The Monetary Policy Committee (MPC) sets key interest rates in India. Its decisions impact inflation and economic growth. The MPC meets periodically to review economic conditions.
S&P Global – S&P Global is a credit rating agency. It provides financial market insights and forecasts. Its ratings influence investment decisions globally, including those in emerging markets like India.

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