ADB Predicts Strong Economic Growth for India in 2024 and 2025
The Asian Development Bank (ADB) has forecasted that India’s economy will grow by 7% in the financial year 2024 and 7.2% in 2025. According to ADB Country Director for India, Mio Oka, India’s economy has shown remarkable resilience despite global challenges and is set for steady growth.
Agricultural and Rural Growth
ADB’s report highlights that a good monsoon season will boost agricultural growth, enhancing the rural economy in FY2024. This growth in agriculture is expected to complement the strong performance of the industry and services sectors.
Employment and Investment
The report is optimistic about new government policies that offer employment-linked incentives, which could increase labor demand and support job creation starting in FY2025. Private investment and urban consumption are also expected to remain strong.
Government Debt and Deficit
With fiscal consolidation efforts, central government debt is projected to decrease from 58.2% of GDP in FY2023 to 56.8% in FY2024. The general government deficit, including state governments, is expected to fall below 8% of GDP in FY2024.
Inflation and Interest Rates
Consumer inflation is anticipated to rise to 4.7% in FY2024 due to high food prices. However, if agricultural supply improves, food prices may decrease, allowing the Reserve Bank of India (RBI) to lower policy interest rates, which could enhance credit expansion.
Current Account Deficit
India’s current account deficit is forecasted to be 1.0% of GDP in FY2024 and 1.2% in FY2025, down from the previous forecast of 1.7% for both years. This improvement is attributed to better exports, lower imports, and strong remittance inflows.
Foreign Direct Investment
Higher foreign direct investment could support growth and investment, particularly in manufacturing. Improvements in agricultural supply may also reduce food prices, potentially lowering consumer inflation below the forecast.
Doubts Revealed
ADB -: ADB stands for Asian Development Bank. It is a bank that helps countries in Asia, including India, by giving them money and advice to grow their economies.
Economic Growth -: Economic growth means the country is making more money and getting richer. It usually means people have more jobs and can buy more things.
FY2024 -: FY2024 stands for Fiscal Year 2024. A fiscal year is a 12-month period used for budgeting and financial purposes. FY2024 means the year from April 2023 to March 2024.
Resilience -: Resilience means being strong and able to recover quickly from problems. In this context, it means India can handle global challenges well.
Monsoon -: Monsoon is a season in India when it rains a lot. Good monsoon means there is enough rain for crops to grow well, which helps farmers and the economy.
Consumer Inflation -: Consumer inflation means the prices of things people buy are going up. It means you need more money to buy the same things.
Interest Rates -: Interest rates are the extra money you pay when you borrow money from a bank. Lower interest rates mean it is cheaper to borrow money.
