Moneycontrol Pro Panorama | India at big club threshold (2024)

Dear Reader,

The International Monetary Fund's (IMF) latest update reiterates India’s rise on the global economic landscape. India’s output is projected to grow twice as fast the global economy in FY25 and FY26, outpacing China and other emerging markets. According to IMF, the 3.2 percent growth forecast for the global economy in 2024 is low by historical standards and reflects headwinds from high borrowing costs, the Russia-Ukraine war and geopolitical tensions. India’s economic growth is also estimated to moderate from the previous fiscal year. But even the absolute growth rates are expected to be healthy.

“Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population,” IMF said in the World Economic Outlook report. The growth projections given by IMF are for fiscal years FY25 (2024) and FY26 (2025).

Economists elsewhere share IMF’s views on India’s economic prospects. For instance, Nomura expects the Indian economy to grow at an average annual rate of 7 percent between 2024 and 2028. “With China’s economy slowing, India is likely to be the fastest growing Asian economy this decade, in our view,” economists at Nomura said in a note.

The HSBC Flash India Composite Purchasing Managers Indices (PMI) indicate upbeat activity in Indian economy. At 62.2 in April, the Flash India Composite PMI output index rose at the fastest pace in nearly 14 years. The Flash PMI signals a very strong economy.

If the IMF estimates hold true, then the steady growth can propel India to the world’s fourth-largest economy in the world by 2025 and third-biggest by 2027. You can read Manas Chakravarty’s analysis of the IMF's economic growth projections here.

Climbing the world economic league tables can have positive implications for India. Allocations from global funds will rise, deepening India’s public markets. Companies will be able to raise larger sums from overseas investors. The success of Vodafone Idea’s follow-on-public offer is a case in point.

“If we are discussing the clout of an economy in the world, then overall GDP certainly matters. A country with a large GDP means a big market and it will therefore be a magnet for capital wanting to tap that market,” adds Chakravarty. Do read.

Talking of big numbers, Reliance Industries became the first Indian company to report a pre-tax profit of over Rs 1 Lakh crorein FY24. Revenues at the company increased by 11 percent in Q4 FY24, driven by key business verticals of oil and gas, chemicals, retail and digital services. “With a strong capex pipeline, the company remains focused on sustaining growth momentum through its foray into newer verticals such as renewable and clean energy,” writes our Research Team.

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(These are published every trading day before markets open and can be read on the app)
R Sree Ram
MoneycontrolPro

R. Sree Ram

first published: Apr 23, 2024 04:33 pm

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