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"India's economy has performed well and stronger-than-expected
data in 2023 has caused us to raise our 2024 growth estimate to
6.8% from 6.1%," Moody's said. "India is likely to remain the
fastest growing among G-20 economies over our forecast horizon."
India's economy grew at its fastest pace in one-and-half years
in the final three months of 2023, led by strong manufacturing
and construction activity, posting growth of 8.4%, which was
faster than the 6.6% estimated by economists.
High-frequency indicators show the economy's strong third and
fourth quarter momentum carried into the first quarter of the
current calendar year, Moody's said.
"Robust goods and services tax collections, rising auto sales,
consumer optimism and double-digit credit growth suggest urban
consumption demand remains resilient," it added. "On the supply
side, expanding manufacturing and services PMIs add to evidence
of solid economic momentum."
The ratings agency said it expects policy continuity after the
general election due by May and a continued focus on
infrastructure development.
While private industrial capital spending has been slow to pick
up, it is expected to grow with ongoing supply chain
diversification benefits and investors' response to the
government's scheme to boost key manufacturing industries, it
said.
Rising capacity utilisation, robust credit growth and upbeat
business sentiment point to an improving outlook for private
investment, it added.
Headline inflation in January eased to 5.1% from the previous
month's 5.7% but remains well-above the central bank's 4%
target.
"Given the solid growth dynamics and inflation above the 4.0%
target, we do not expect policy easing any time soon," Moody's
said.
(Reporting by Swati Bhat. Editing by Sam Holmes)
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