2024-08-31 02:40:29
New Delhi: Moody’s Ratings on Thursday raised India’s economic growth forecast for the year 2024 and 2025. The rating agency raised it to 7.2 percent and 6.6 percent. Releasing the August version of the Global Outlook 2024-25, the rating agency said that if private consumption picks up pace, India’s economic growth rate can be even higher. At the same time, Fitch has maintained India’s rating at ‘BBB-‘ with a stable outlook. Moody’s said in its report, “From a macroeconomic perspective, the Indian economy is in a good position with a combination of solid growth and low inflation.”
GDP growth is estimated to be 7.2% in 2024
The rating agency estimates that India’s GDP growth will be 7.2 percent in the current year. Whereas earlier it was estimated to be 6.8 percent. At the same time, the country’s economic growth is estimated to be 6.6 percent in the year 2025. Whereas the previous estimate was 6.4 percent.
Despite the continuation of tight monetary policy and ongoing efforts towards fiscal consolidation, the economy grew at 7.8 percent in the first quarter of 2024. Moody’s said that there are signs of improvement in rural demand due to better prospects of agricultural production amid above normal rains during the monsoon.
Fitch maintains India’s credit rating at ‘BBB-‘
At the same time, global rating agency Fitch has maintained India’s credit rating at ‘BBB-‘ with a stable outlook. Thus, India’s rating remains at the lowest investment level ‘BBB-‘. This is the lowest investment rating since August 2006. Fitch Ratings said in a statement, ‘The rating agency has maintained India’s long-term foreign currency issuer default rating (IDR) at ‘BBB-‘ with a stable outlook.’
According to the statement, India’s rating is supported by its strong medium-term growth outlook, driven by India’s share of gross domestic product (GDP) in the global economy, its solid external financing position and improvements in structural aspects of its debt profile.
This is the reason given for maintaining the rating
Fitch said that the recent achievement of fiscal deficit targets, increased transparency and a jump in revenue have enhanced fiscal credibility. This has increased the possibility that India’s government debt may decline marginally in the medium term.
Despite this, fiscal data remains a weakness in India’s debt outlook. The deficit, debt and debt service burden are higher than other countries in the ‘BBB’ category. Governance indicators and a decline in per capita GDP also impact the rating.
“We forecast GDP growth of 7.2 per cent in FY24-25 and 6.5 per cent in the next fiscal year, slightly lower than 8.2 per cent in FY23-24,” Fitch Ratings said, amid expectations that India will remain one of the fastest-growing economies globally.