Fitch Ratings Agency on Tuesday (June 18) raised India’s GDP growth forecast for the current financial year 2024-25 to 7.2% from 7% estimated in March. The agency has raised India’s growth forecast citing improvement in consumer spending and growth in investment. Fitch has projected a growth rate of 6.5% for the financial year 2025-26. At the same time, India’s economy is estimated to grow at a growth rate of 6.2% for the financial year 2026-27. Fitch’s estimate is equal to RBI’s estimate Fitch’s estimate is equal to RBI’s estimate. Earlier this month, RBI had estimated that the Indian economy would grow at 7.2% in the current financial year due to improvement in rural demand and softening of inflation. Indian economy grew at the rate of 8.2% in FY-24 India’s economy grew at the rate of 8.2% in the last financial year (2023-24), while the growth rate was 7.8% in the March quarter. Fitch expects inflation to decline to 4.5% by the end of 2024. Inflation will average 4.3% in 2025 and 2026, while the inflation average will be 4.3% in 2025 and 2026. Fitch said that it expects the RBI to cut policy interest rates by 25 basis points this year to 6.25%. India’s GDP may remain at 6.6% in FY2024-25: World Bank A few days ago, the World Bank maintained India’s GDP forecast for FY2024-25 at 6.6%. Earlier in April, the World Bank had also estimated India’s GDP for FY25 at 6.6%. The World Bank had said that India will remain the fastest growing country among the world’s largest economies. However, the pace of India’s expansion is expected to slow. The World Bank had reported that after high growth in FY 2023-24, stable growth of an average 6.7% per annum is projected for the three financial years starting from FY 2024-25. India’s economy will grow at 6.7% in FY 26 The World Bank has projected India’s economy to grow at 6.7% in FY 26 and 6.8% in FY 27. At the same time, the National Statistical Office (NSO) has projected GDP to grow at 8.2% in FY 24. RBI raised GDP forecast, maintained inflation forecast What is GDP? GDP is one of the most common indicators used to track the health of the economy. GDP represents the value of all goods and services produced within the country in a specific time period. It also includes foreign companies which produce within the country’s borders. There are two types of GDP There are two types of GDP. Real GDP and Nominal GDP. In real GDP, the value of goods and services is calculated on the base year’s value or stable price. Currently, the base year for calculating GDP is 2011-12. Whereas nominal GDP is calculated on current prices. How is GDP calculated? A formula is used to calculate GDP. GDP=C+G+I+NX, here C means private consumption, G means government spending, I means investment and NX means net export. Who is responsible for the increase or decrease in GDP? There are four important engines for increasing or decreasing GDP. The first is you and me. Whatever you spend contributes to our economy. Second is the business growth of the private sector. It contributes 32% to GDP. Third is government expenditure. It means how much the government is spending to produce goods and services. It contributes 11% to GDP. And fourth is net demand. For this, India’s total exports are subtracted from total imports, because in India imports are more than exports, so its impact on GDP is negative.
