Ahead of Budget, IMF raises India's GDP growth forecast to 6.5%

This remains slightly below the expectations set by Indian agencies.

"Growth in India is projected to remain strong at 6.5 percent in both 2024 and 2025, with an upgrade from October of 0.2 percentage point for both years, reflecting resilience in domestic demand," the IMF said on January 30 in an update to its World Economic Outlook report.

The positive revision in growth forecasts precedes the unveiling of the interim Budget for 2024-25, where the Indian finance ministry is anticipated to continue implementing measures to enhance fiscal health and foster economic growth.

Furthermore, economists predict the Budget figures to assume a nominal GDP growth of 10.5 percent for the upcoming year, surpassing the statistics ministry's initial advance estimate of 8.9 percent in 2023-24.

In response to the remarkable GDP data released in November 2023, revealing a 7.6 percent expansion in the Indian economy from July to September, the statistics ministry has projected a real growth rate of 7.3 percent for 2023-24.

Although the Budget doesn't explicitly forecast real GDP growth, the finance ministry, in a report on January 29, indicated that the Indian economy's growth rate might approach 7 percent in 2024-25.

"The strength of the domestic demand has driven the economy to a 7 percent plus growth rate in the last three years," the ministry said in a report authored by officials from the office of the Chief Economic Adviser V Anantha Nageswaran.

The RBI has echoed a similar sentiment, although it has not officially adjusted its forecast for 2024-25 since the last update in October 2023.

The central bank is expected to issue a new forecast for the upcoming year on February 8, coinciding with the Monetary Policy Committee's announcement of its interest rate decision. Despite receiving positive assessments from the IMF, it's noteworthy that the agency elevated its global growth projection solely for the year 2024.