New Delhi :
According to Moody’s Global Macro Outlook report released on Friday, India’s economy is in a better position with strong growth and inflation is expected to decline in the coming months. The global rating agency has projected a growth of 7.2 per cent for the calendar year 2024, followed by 6.6 per cent in 2025 and 6.5 per cent in 2026. It is also expected that the Indian economy will maintain its steady pace in the July-September quarter after registering a growth rate of 6.7 percent in the April-June quarter.
“High-frequency indicators, including expansion in manufacturing and services PMIs, strong credit growth and consumer optimism – point to stable economic momentum in the third quarter,” Moody’s Ratings said.
Domestic consumption may increase
“Domestic consumption is likely to increase, driven by increased spending during the current festive season and sustained growth in rural demand due to improved agriculture,” the report said.
“India’s economy is growing strongly and has the potential to sustain high growth rates, as the strong financial position of the private sector underpins a positive economic cycle,” it said.
The report said that increased capacity utilization, strong business sentiment and government investment in infrastructure are likely to support private investment.
Expectation of decline in inflation rates
Moody’s also noted that India’s strong economic fundamentals, such as healthy corporate and bank balance sheets, a resilient external position and strong foreign exchange reserves, underpin the outlook. Besides, the report also talks about decline in inflation rates in the coming months.
“Despite a near-term uptick, inflation should remain subdued in the coming months in line with the RBI’s target, as food prices will ease amid higher sowing and adequate foodgrain buffer stocks,” the report said.
India’s inflation hit a 14-month high of 6.2 percent in October, crossing the upper limit of the RBI’s 2-6 percent band. This is due to rising food prices and late withdrawal of monsoon, which caused huge losses to vegetable crops like potatoes and onions.
Hope of RBI rate cut is over
Moody’s report said, hopes of RBI cutting rates to boost economic growth have ended, as the central bank has made it clear that it will reduce the policy rate only when inflation is on a sustainable basis. Will come down to 4 percent.
“Although the central bank made its monetary policy stance neutral by keeping the repo rate steady at 6.5 percent in October, it will maintain tight monetary policy settings next year as well.”
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