Economy: India to grow at 6.3% in FY24, says IMF
Virendra Pandit
New Delhi: Although the International Monetary Fund (IMF) has projected the Indian economy’s growth at a rate of 6.3 percent in 2023-24, the uncertainties created by the Hamas-Israel conflict, starting October 7, may throw a spanner in it.
But the instability in the Middle East may also affect the rest of the world.
IN 2022,23, the Indian economy grew by 7.2 percent. Even at the fresh projection of 6.3 percent, it is among the best, given the multiple uncertainties thrown up by, among other reasons, the Russia-Ukraine war.
Now the Hamas-Israel conflict may necessitate a revision. The IMF seems to have made its projection before this war broke out last weekend.
“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 point for 2023, reflecting stronger-than-expected consumption during April-June,” IMF said in its annual publication, World Economic Outlook (WEO), released on Tuesday on the eve of the IMF-World Bank meeting scheduled to start on Wednesday in Morocco.
Finance Minister Nirmala Sitharaman will also participate in this meeting. During her visit, bilateral and investor meetings with Indonesia, Morocco, Brazil, Switzerland, Germany, and France, besides other associated meetings, have also been planned from October 11 to 15 in Marrakech, Morocco, officials said on Monday.
Due to better consumption demand, the IMF upped India’s economic growth forecast by 20 basis points to 6.3 percent for FY24. However, there is no change in the projection for FY25, also pegged at 6.3 percent.
In April, the IMF projected the growth rate at 5.9 percent, upping it in July to 6.1 percent on the back of a strong growth of 7.8 percent during the April-June quarter.
Earlier in October, the World Bank retained growth projection for the current financial year at 6.3 percent because of good investment and consumption.
The Government of India and the Reserve Bank of India (RBI) had, however, projected the country’s GDP growth at 6.5 percent, the same as those of the Organization for Economic Cooperation and Development (OECD), Fitch Ratings, and Asian Development Bank (ADB). But it is higher than S&P Global Ratings’ estimate of 6 percent.
While the leading economies—the US, China, etc.—are plummeting, India has a share of 7.3 percent in the World Economy and 12.5 percent in emerging markets and developing economies.
On the world economy, WEO lowered the growth projections for 2023 and 2024.
“According to our latest projections, world economic growth will slow from 3.5 percent in 2022 to 3 percent this year and 2.9 percent next year, a 0.1 percentage point downgrade for 2024 from July. This remains well below the historical average,” Pierre-Olivier Gourinchas, Chief Economist and Economic Counsellor, IMF, said.
Referring to the world economy, he said it is recovering from the pandemic, Russia’s invasion of Ukraine, and the cost-of-living crisis. “The global economy is limping along, not sprinting,” he noted.
“China’s real-estate crisis could intensify, posing a complex policy challenge. Restoring confidence requires promptly restructuring struggling property developers, preserving financial stability, and addressing the strains in local public finance. If China’s real estate prices decline too rapidly, the balance sheets of banks and households will worsen, with the potential for serious financial amplification,” he observed.
