The International Monetary Fund (IMF) has revised its growth projection for India's Gross Domestic Product (GDP) in the fiscal year 2024/25, now expecting an expansion of 6.8%. It has issued an additional forecast of 6.5% growth rate for the subsequent year. It is this adjustment that was announced in the World Economic Outlook during the World Bank IMF Spring Meetings, there is a 0.3 percentage point rise from the previous estimate in January 2024.
While amidst the COVID-19 supply chain disruptions and geopolitical disputes like Russian aggression in Ukraine, the world economy has proven to be surprisingly strong. The positive sustained growth and the inflation stabilizing to target levels have confounded the predictions of stagflation and global depression. According to the IMF, the global output growth is projected to reach 3.2% in both 2024 and 2025 which constitutes a significant recovery from the sluggish performance of the previous year when it was just 2.3%.
The country's deceleration in growth from 7.8% of the previous year is commonly seen as a result of the implementation of tighter monetary and fiscal policies, the main aim of which is to bring down the inflation rate. On a press briefing, the IMF's Daniel Leigh revealed that inflation is expected to hit 4.6 percent this year and, 4.2 percent of next year. Nevertheless, the Leigh pointed out that the private demand can intensify the projected growth than the actual outturn because of the revised figures.
It is this re-direction in India's growth path that can be attested to the delicate balance between policy actions, economic performance and global factors, thereby indicating the need for continuous monitoring and adjustment so as to achieve long run sustainability and inclusivity of the Indian economy in the midst of constantly changing global environment.
