UN Revises India’s 2024 Growth Projection to 7%

New Delhi: The United Nations has revised India’s growth projections for 2024 and projected the economy to grow close to 7 per cent this year. This is an increase from the earlier projection of 6.2 per cent made in January this year. The agency’s World Economic Situation and Prospects (WESP) report as of mid-2024, released on Thursday late evening, stated that India’s economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025.

In line with the report, many international rating agencies have projected the upward growth for the current fiscal year in India. For instance, the Reserve Bank of India (RBI) also projected a growth of 7 per cent in the current fiscal, while S&P Global Ratings and Morgan Stanley projected a growth rate of 6.8 per cent. Asian Development Bank (ADB) and Fitch Ratings each also estimated growth at 7 per cent.

The WESP report, however, said that although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly. Meanwhile, labour market indicators have improved too amid a robust growth and higher labour force participation.

The government is also committed to gradually reduce fiscal deficit, and increase capital investment. The UN projection comes after Moody’s ratings pegged the growth of the Indian economy at 6.6 per cent in the current fiscal year, which is lower than the RBI and other agencies’, but at par with Deloitte’s, which also projected a growth of 6.6 per cent.

The report also noted that consumer price inflation in India is projected to decrease from 5.6 per cent in 2023 to 4.5 per cent in 2024, staying within the central bank's medium-term target range of 2-6 per cent. This signifies India's fiscal position is less constrained compared to other countries, with robust support from both monetary and fiscal policies to stimulate growth.