IMF raises India’s FY24 growth forecast to 6.3% on consumption boost

The International Monetary Fund (IMF) has raised India's growth forecast for the financial year 2023-24 by 20 basis points from its July forecast and 40 basis points from its April 2023 forecast to 6.3% on consumption boost.

"Growth in India is projected to remain strong, at 6.3 percent in both 2023 and 2024, with an upward revision of 0.2 percentage points for 2023, reflecting stronger-than-expected consumption during April-June," the IMF says in its latest World Economic Outlook for 2023-24.

The country's economic growth projections for the next financial year 2024-25 remain the same at 6.3%, according to the IMF. However, by this estimate, the country's growth for FY24 will be lower than the 7.2% growth it registered in FY23.

The IMF says growth in emerging and developing Asia is projected to rise from 4.5% in 2022 to 5.2% in 2023, which will then decline to 4.8% in 2024. This means downward revisions of 0.1 percentage point and 0.2 percentage point, for 2023 and 2024, respectively, compared with the IMF's July projections.

The revision, however, reflects a lower forecast for China, which is revised downward by 0.2 percentage points for 2023 and by 0.3 percentage points for 2024 to growth of 5% and 4.2%, respectively.

The IMF has cited the property market crisis in the country for lowering the growth revision.

On the global level, the growth is projected to fall from 3.5% in 2022 to 3% in 2023 and 2.9% in 2024 on an annual average basis. There is a downward revision of 0.1 percentage point for 2024, compared with the IMF's July 2023 update.

For advanced economies, the growth slowdown projected is significant — from 2.6% in 2022 to 1.5% in 2023 and 1.4% in 2024 — with no overall revision from the IMF"s July 2023 WEO update amid stronger-than-expected US momentum and weaker-than-expected growth in the euro area. "About 90 percent of advanced economies are projected to see lower growth in 2023," says the report.

The IMF projections on India's economic growth are in line with forecasts by other global agencies. The World Bank forecasts India's GDP to grow 6.3% in the current 2023-24, citing India continues to show "resilience" against the backdrop of a challenging global environment.

India's central bank, the Reserve Bank of India (RBI), in its latest monetary policy announcement, however, recently kept India's growth forecast unchanged at 6.5% for the fiscal year 2023-24. 

Among other global institutions, US-based global ratings agency S&P Global Ratings last month retained India's growth forecast in the financial year 2023-24 at 6%. India's finance ministry also said the country's GDP growth outlook for the financial year 2023-24 remains "bright" and the economy could grow at 6.5% in the fiscal year. The Paris-based Organisation for Economic Co-operation and Development (OECD) raised India’s GDP forecast for 2023-24 to 6.3% from 6% projected earlier.