“Moody’s: India’s growth Shines despite inflation woes

Moody’s described India’s economy as in a “sweet spot,” combining strong growth with easing inflation. It projected GDP growth at 7.2% for 2024, followed by 6.6% in 2025 and 6.5% in 2026.

In Q2 2024, real GDP grew 6.7% year-over-year, driven by rising household consumption, increased investments, and robust manufacturing. Positive indicators, such as strong manufacturing and services PMIs, credit growth, and consumer optimism, signal sustained momentum in Q3.

Festive season spending and a rebound in rural demand are expected to sustain household consumption. Private investment is likely to rise due to growing capacity utilization, improved business sentiment, and ongoing government infrastructure projects. Moody’s credited India’s solid fundamentals, including healthy corporate and bank balance sheets, strong external reserves, and a stable forex position, for its optimistic outlook.

However, food price volatility remains a challenge. Inflation rose to 6.2% in October, driven by a 10.9% spike in food prices, exceeding RBI’s tolerance band. Moody’s expects inflation to moderate due to better crop sowing and ample grain reserves. Yet, global tensions and weather risks may prompt the RBI to maintain cautious monetary policies.

Despite inflation concerns, India’s economic momentum remains robust, supported by sound policies and resilient fundamentals