India is expected to grow fastest of the G20 nations: Moody's

India will achieve significant scale across several industries over the next decade, including IT services, steel, cement, aviation, and power

In the next few years, Moody's Investors Service predicts that India will be the fastest-growing economy in the G20, driven by growth in manufacturing and infrastructure. There may be some pushback from "reform and policy barriers" for investments.

"In the Union Budget in February 2023 alone, the government allocated around $120 billion toward various national infrastructure projects, including $30 billion each toward railways and national highways," Moody's said in a report dated May 23.

Investing in housing and large infrastructure projects will boost cement and steel demand, while the government's net-zero commitment will boost renewable energy production.

"These investments, we believe, will be instrumental in India achieving GDP growth of 6.1 percent and 6.3 percent respectively, for fiscal years ending March 2024 and 2025, the highest among its G20 EM (emerging market) peers, and higher than China's growth in 2023 and 2024," Moody’s added.

In the past 19 years, India has only exceeded China's annual growth rate four times, according to Moody's.

As predicted by Moody's, India's growth will be lower than expected. RBI expects India's GDP to grow by 6.5 percent in 2023-24, 40 basis points faster than Moody's.

"Ongoing efforts by India's government to reduce corruption, formalise economic activity, and bolster tax collection and administration are encouraging, although there are increasing risks to the efficacy of these efforts," Moody’s said.