India Remains Fastest Growing Economy Despite Odds

Despite GDP slowdown, inflation rise, India retained its fastest growing economy tag in 2024 too as major economies and rest of the world were reeling under 4 per cent growth levels. India’s Real GDP growth eased to a seven-quarter low of 5.4 per cent in the second quarter (July-Sept) of the current 2024-25 fiscal year from 6.7% in the preceding quarter. The outlook for Q3 appears bright, as reflected in the performance of High Frequency Indicators (HFIs) for October and November 2024, according to the Finance Ministry. The supporting factors for economy rebound include an increase in MSP for Rabi crops, high reservoirs level and adequate fertiliser availability, positive forecast on industrial production.

Reserve Bank also significantly lowered the growth projection for current fiscal year to 6.6 per cent from 7.2 per cent earlier in view of slowdown in economic activity as well as stubborn food prices.

The GDP growth was 8.2 per cent in FY24, seven per cent in FY23, 9.1 per cent in FY22 and -5.8 per cent in FY21 and 3.9 per cent in FY20.

Asia and the Pacific’s economies are projected to grow 4.9 per cent in 2024, slightly below ADB’s September forecast of 5 per cent. This was primarily because two domestic demand components -- private final consumption expenditure and gross fixed capital formation -- together accounted for a fall of 1.5 percentage points.

The Asian Development Bank (ADB) lowered India’s economic growth forecast to 6.5 per cent for the current financial year from its earlier estimate of 7 per cent and from 7.2 per cent to 7 per cent next year, due to lower-than-expected growth in private investment and housing demand.