Fitch’s decision to upgrade India’s GDP prediction for FY24 to 6.3% is a reflection of the strengthening trend seen in the nation’s economic indicators.

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Introduction

For the fiscal year 2023-2024 (FY24), the ratings agency Fitch updated its GDP projection for India and now expects a growth rate of 6.3%. This increase from the prior forecast of 6% is due to the nation’s near-term momentum and a strong first-quarter performance. Fitch highlights the Indian economy’s strength with encouraging statistics such as a 6.1% first-quarter GDP growth, resilient auto sales, positive PMI surveys, and recent credit expansion.

Domestic Demand and Net Trade as Growth Drivers

Fitch highlights robust domestic demand and favorable net trade contributions as primary drivers of expenditure-based GDP growth. Despite pandemic and global economic challenges, India’s domestic demand remained resilient, supported by factors like increased government spending, improved consumer sentiment, and revived business activities.

Reassessment of India’s Economic Prospects

Fitch cut its growth projection for India in March from 6.2% to 6% because of worries about high inflation, rising interest rates, and a slowing global economy. However, since that time, the country has seen a noticeable improvement in its internal economy and a moderation in inflation. Fitch revised its projection upward after reevaluating India’s economic prospects in light of these encouraging developments.

Comparative Analysis and Previous Growth Figures

FY24 GDP growth is projected to decline from 7.2% in FY23 to 6.3%. However, it’s important to remember that despite the pandemic’s impact, FY23 witnessed significant growth. Given that the Indian economy contracted by 7.3% in FY21, the recovery that followed in FY22 and FY23 is noteworthy.

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