India's Economic Outlook: A Balancing Act Between Growth and Inflation

Moody's Ratings forecasts a 7.2% GDP growth for India in 2024 amidst inflation risks, which may lead the RBI to maintain a tight monetary policy. Despite inflation challenges, sound economic fundamentals and increased consumer spending indicate solid growth potential for India's economy.

Moody's Ratings has projected a 7.2 percent GDP growth for India in 2024, citing a favorable economic position but highlighting potential inflationary challenges. Despite these concerns, the Reserve Bank of India (RBI) is expected to maintain a restrictive monetary policy, influenced by ongoing inflation risks, especially in vegetable prices.

The agency's Global Macro Outlook 2025-26 suggests household consumption will bolster, driven by festive season spending and a rise in rural demand. Increased capacity utilization, positive business sentiment, and government infrastructure initiatives are expected to stimulate private investment.

Moody's also underscores external geopolitical and trade tensions, particularly US-China dynamics, as potential risks to global economic stability. The report suggests that economies with robust domestic growth drivers, like India, may showcase resilience against global economic fragmentation.

(With inputs from agencies.)