India in a sweet spot: Moody's report highlights robust economic growth momentum amid inflation challenges
inflation, according to a recent report by Moody’s. The ratings agency projects India’s GDP to grow by 7.2% in 2024, followed by 6.6% in 2025 and 6.5% in 2026.
In the second quarter of 2024, India’s real GDP expanded 6.7% year-over-year, fueled by a resurgence in household consumption, increased investment, and solid manufacturing activity. Indicators of economic health, including positive manufacturing and services PMIs, robust credit growth, and consumer optimism, point to continued growth in the third quarter.
Household spending is expected to remain strong, buoyed by festive season purchases and rising rural demand as agriculture rebounds. Private investment is likely to be supported by increasing capacity utilization, strong business sentiment, and the government’s ongoing infrastructure investments, said the report.
Moody’s noted that India’s solid economic fundamentals, like healthy corporate and bank balance sheets, a resilient external position, and robust foreign exchange reserves, bolster the outlook.
Food inflation woes
Food price volatility remains a concern, as headline inflation recently surged to 6.2% in October due to a spike in vegetable prices, surpassing the Reserve Bank of India’s (RBI) tolerance band of 4% (±2%).
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