Winning Bizness Economic Desk

Mumbai. The International Monetary Fund (IMF) has revised its growth forecast for India’s economy, projecting a robust 7% expansion for the current financial year (FY25). This upward revision, which aligns with similar forecasts by the World Bank, reflects optimism surrounding India's economic performance, driven by key factors such as private consumption and increased investment. The IMF, in its July World Economic Outlook (WEO) update, adjusted India's GDP growth estimate upward by 20 basis points, from the earlier forecast of 6.8% to 7%. The organization cited strong private consumption, particularly in rural areas, as the main driver behind this optimistic revision. The IMF stated, "The growth forecast in India has been revised upward, reflecting carryover from the upward revision for growth in 2023."

Impact of Government Spending Slowdown

Despite this positive outlook, recent data from the National Statistical Office (NSO) indicated a slight deceleration in GDP growth during the April-June quarter of FY25, where the growth rate declined to 6.7%. This slowdown was primarily attributed to a reduction in government spending due to the implementation of the model code of conduct ahead of the general elections. This marks a slowdown from the previous financial year’s robust performance, which saw an 8.2% GDP growth, supported by a 7.8% growth rate in the last quarter of FY24.

RBI's Projections in Line with IMF

The Reserve Bank of India (RBI) has also projected the Indian economy to grow at a slightly higher rate of 7.2% for FY25, reinforcing the confidence in the country's economic trajectory. Both the IMF and RBI forecasts highlight the resilience of the Indian economy amid global uncertainties. Gross Domestic Product (GDP) is a key indicator used to gauge the health of an economy. It represents the total value of all goods and services produced within a country’s borders over a specific period. India calculates GDP using two methods: Real GDP, which is adjusted for inflation using 2011-12 as the base year, and Nominal GDP, which reflects current market prices. This latest revision by the IMF underscores the ongoing strength and resilience of India's economy, even as it navigates the challenges posed by global and domestic factors.