The Indian economy enjoys optimal conditions, blending strong growth with easing inflation, notes rating agency Moody’s. Moody’s predicts 7.2% GDP growth for India in 2024, followed by 6.6% in 2025. According to Moody’s Global Macro Outlook 2025-26, the global economy has demonstrated impressive resilience in recovering from pandemic-related supply chain disruptions, the Russia-Ukraine conflict, inflationary pressures, and monetary policy tightening.

“Most G-20 economies will experience steady growth and continue to benefit from policy easing and supportive commodity prices,” said Moody’s.

India’s real GDP grew 6.7% Year-on-Year (YoY) in Q2 2024, fuelled by household consumption, investment, and manufacturing growth, reports Moody’s. Key economic indicators, such as rising PMIs and credit growth, coupled with upbeat consumer sentiment, point to sustained growth in Q3, said Moody’s.

Indian Economy: What Else?

“Indeed, from a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation. We forecast 7.2 per cent growth for calendar year 2024, followed by 6.6 per cent in 2025 and 6.5 per cent in 2026,” said Moody’s.

Additionally, Moody’s predicts a surge in India’s household consumption, driven by festive season spending and robust rural demand due to improved agricultural prospects. Private investment in India is expected to benefit from increasing capacity utilization, positive business sentiment, and sustained government infrastructure spending, said Moody’s.

“Sound economic fundamentals, including healthy corporate and bank balance sheets, a stronger external position, and ample foreign exchange reserves also bode well for the growth outlook,” added Moody’s. The rating agency added, “Despite the near-term up-tick, inflation should moderate toward the RBI’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks.”

However, India’s headline inflation surpasses RBI’s tolerance limit, hitting 6.2% in October, driven by vegetable price surge.