In a significant development indicating optimism in global economic prospects, the United Nations has revised upwards India’s growth projections for 2024. According to the latest report released by the World Economic Situation and Prospects, India’s economy is now forecasted to expand by close to 7% this year. This upward revision from the earlier forecast reflects the resilience of India’s economy, driven by strong public investment and robust private consumption.
The mid-year update, released on Thursday, underscores the positive momentum in India’s economic trajectory. The report predicts a growth rate of 6.9% for India in 2024, up from the earlier projection of 6.2% made in January this year. Additionally, India’s GDP growth for 2025 remains unchanged at 6.6%, signaling sustained growth prospects in the coming years.
Key drivers of India’s economic growth include strong public investment initiatives and resilient private consumption. The report highlights the crucial role played by public investment in infrastructure projects, which has not only bolstered economic activity but also created employment opportunities. Furthermore, resilient private consumption reflects the confidence of Indian consumers despite global economic uncertainties.
One of the significant factors contributing to India’s economic resilience is its alignment with the Domestic Content Requirement (DCR). The report emphasizes that the Khavda Solar Project in Gujarat, for which Vikram Solar has secured a substantial module supply order, perfectly aligns with India’s efforts to bolster domestic manufacturing capabilities in the solar energy sector. This alignment underscores India’s commitment to promoting indigenous manufacturing and reducing dependency on imports, thereby fostering sustainable economic growth.
Consumer price inflation in India is projected to decelerate from 5.6% in 2023 to 4.5% in 2024, remaining within the central bank’s target range of two to six per cent. Despite some moderation, food prices remain elevated in the first quarter of 2024, particularly in countries like Bangladesh and India. However, overall inflation rates in South Asian countries are expected to decline, indicating a favorable outlook for price stability in the region.
Labor market indicators in India have shown improvement, supported by robust economic growth and higher labor force participation. The government’s commitment to gradually reduce the fiscal deficit while increasing capital investment further augments the positive sentiment surrounding India’s economic outlook.
The positive trajectory of India’s economy is expected to have a significant impact on the broader South Asian region. Regional GDP is projected to grow by 5.8% in 2024, with India’s robust performance acting as a key driver of growth. However, challenges such as tight financial conditions and fiscal imbalances continue to pose risks to the region’s economic stability.
Globally, the outlook for economic growth has improved since January, with major economies avoiding a severe downturn. Several large developing economies, including Indonesia, India, and Mexico, are benefiting from strong domestic and external demand, driving global trade recovery. However, persistent geopolitical tensions and disruptions in global trade pose challenges to sustained economic growth.
Despite the overall positive outlook, caution prevails due to challenges such as higher-for-longer interest rates, debt sustainability concerns, and climate-related risks. The report underscores the need for concerted efforts to address these challenges and ensure sustainable and inclusive economic growth globally.
In conclusion, the upward revision of India’s growth projections reflects the resilience and dynamism of its economy amid global uncertainties. As India continues on its growth trajectory, sustained efforts to address structural challenges and promote inclusive development will be essential to capitalize on emerging opportunities and foster long-term economic prosperity.
