According to Moody’s, India’s economy would rise rapidly in 2024 and 2025.

The Indian economy is expected to witness 6.8% growth this year and 6.5% in 2025, according to Moody’s Ratings, which was based on robust economic performance and continued post-election policy.

Real GDP growth in India increased to 7.7% in 2023 from 6.5% in 2022, primarily due to the government’s heavy capital spending and brisk manufacturing output.

High-frequency indicators have shown continued economic momentum in the March and June quarters of this year. These indicators include robust goods and services tax revenues, growing auto sales, consumer optimism, and expanding manufacturing and services PMIs.

“We believe the Indian economy should comfortably register 6-7 per cent annual real GDP growth and we forecast around 6.8 per cent growth,” Moody’s said in its update to Global Macro Outlook 2024-25.

It said strong, broad-based growth will likely be sustained with post-election policy continuity.

Moody’s said this year’s interim Budget targets capital expenditure allocation of Rs 11.1 lakh crore, or 3.4 per cent of GDP in 2024-25, 16.9 per cent above the 2023-24 estimates.

“We expect policy continuity after the general election and continued focus on infrastructure development,” it said.

Private industrial capital spending is also set to pick up with ongoing supply chain diversification and the government’s production linked incentive (PLI) scheme to boost targeted manufacturing industries, Moody’s Ratings added.

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