India's fast economic growth lays firm ground for next government
India's economy grew at a faster-than-expected pace of 7.8% year-on-year in the first three months of 2024, helped by a strong performance in the manufacturing sector, and economists expect the momentum to continue this year.
The highest growth pace among the largest economies globally will bolster the economic record of Prime Minister Narendra Modi, who is hoping to win a rare third term in the national election, with results set to be released on June 4.
Investors are looking ahead to the election outcome and the full-year budget in mid-July to see what steps the new government might take to boost the economy.
Also Read: India's GDP grows 7.8 per cent in Q4, FY24 growth pegged at 8.2 per cent
The Reserve Bank of India's (RBI) record surplus transfer of 2.11 trillion rupees ($25.3 billion) will help the next government to increase state spending to bolster growth.
Garima Kapoor, economist, at Mumbai-based Elara Securities, said the growth figures come amid subdued inflation and a forecast of a normal monsoon, which could help boost consumer demand.
Also Read: Economists project continued economic momentum and stability after India reports robust GDP growth in Q4
The arrival of India's monsoon rains can support farm output and rural wages.
«The high frequency indicators during the first two months of this financial year suggest 2024/25 fiscal year has started on a relatively stable footing,» she said.
On Wednesday, S&P Global raised its sovereign rating outlook for India to «positive» from «stable», adding
