With expected rise in domestic demand, International Monetary Fund (IMF) on Tuesday upped its growth projection for India by 30 basis points to 6.8 per cent for the current fiscal year. However, it has not made any changes to its projections for FY26.

The agency has pegged GDP growth for FY24 at 7.8 per cent.

“Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population,” IMF said in its latest edition of World Economic Outlook (WEO), made public on Tuesday. For the current fiscal, the projection is 50 basis points higher than projection made in October and 30 basis points higher than projection made in December.

Despite upward revision, IMF’s latest projection is still lower than that of Asian Development Bank (ADB) and the Reserve Bank of India. Last week, ADB revised its projection to 7 per cent from 6.7 per cent for the current fiscal. The multilateral agency said the growth will be robust, despite moderating in 2024-25 and 2025-26. According to ADB, it will be driven by public and private sector investment demand and by gradual improvement in consumer demand as the rural economy improves.

Earlier this month, while announcing MPC’s decisions, RBI Governor Shaktikanta Das said the outlook for agriculture and rural activity appears bright, with good rabi wheat crop and improved prospects of kharif crops on the back of normal south-west monsoon. “Despite some headwinds, Indian economy is projected to grow at 7 per cent,” he said.

These projections come at a time when the India Metrological Department (IMD) projects above normal monsoon this year. It is critical from the rural demand point of view, which in turn will benefit overall demand, and thus, the overall economy. It may be noted that monsoon was below normal last year and it affected farm growth. However, good growth in manufacturing and services helped the economy to grow more than 7.5 per cent.

Global Economy

According to WEO, the global economy is estimated to have grown at 3.2 percent in 2023. And, it is projected to grow at the same pace in 2024 and 2025. The projection for 2024 is revised up by 10 basis points from the January estimate and by 30 basis points with respect to the estimates released last October.  

Also read: India will become third largest economy in my third term, says PM Modi

“Nevertheless, the projection for global growth in 2024 and 2025 is below the historical (2000–19) annual average of 3.8 percent, reflecting restrictive monetary policies and withdrawal of fiscal support, as well as low underlying productivity growth,” it said.

Advanced economies are expected to see growth rise slightly, with the increase mainly reflecting a recovery in the euro area from low growth in 2023, whereas emerging market and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences, the report said.