After successfully braving the rough waters of 2023, India is likely to remain as the world’s fastest-growing major economy in 2024 on the back of growing demand, moderate inflation, stable interest rate regime and robust foreign exchange (forex) reserves, says the latest Organization for Economic Cooperation and Development (OECD) report.
Despite widespread pessimism witnessed among the developed nations and the worsening geo-political situation, India recorded a gross domestic product (GDP) expansion of 6.1 per cent in the March quarter, the report says.
The growth moved up to 7.8 per cent in the June quarter and was 7.6 per cent in the September quarter. For the first six months of this fiscal, the growth was 7.7 per cent. The growth momentum is expected to sustain in the December quarter, making India the fastest-growing major economy in the world much ahead of China.
For 2024, the OECD expects India to grow at 6.1 per cent and China at 4.7 per cent. On the other hand, major economies, including the US, UK and Japan, are likely to witness either deceleration or very nominal increase in economic growth rates in the coming year.
As per the International Monetary Fund’s (IMF) World Economic Outlook, global growth is estimated to decelerate from 3.5 per cent in 2022 and three per cent in 2023 to 2.9 per cent in 2024.
A member of the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), said India’s growth has shown great resilience despite many external shocks. This is due to increasing economic diversity and the role of policy in smoothing shocks. Equipping people with better skills and assets, will add up to give India good growth in 2024 and beyond.
Dharmakirti Joshi, Chief Economist at rating agency Crisil, said geopolitical developments will again test the resilience of India’s domestic demand in the coming year.
“We expect the GDP to grow at 6.4 per cent in the coming fiscal year, a tad lower than the current one. The lagged impact of interest rate hikes and the global slowdown will be the key drags,” he noted.
A recent article on the state of the economy by the RBI said, “Despite significant global headwinds, the Indian economy remained the fastest growing major economy in 2023. The outlook is one of cautious optimism as consumer confidence remains positive and perceptions about current income turned up in the RBI’s latest survey of households in November 2023.”
RBI’s dynamic Stochastic General Equilibrium (DSGE) model — which is based on microeconomic foundations and rational expectations characterising the choices of agents, such as the representative consumer, producer and the central bank — projects a growth rate of 6 per cent in the financial year 2024-25.
“After a couple of difficult years, the economic environment is turning more benign with inflation trending down and growth remaining robust.