India dubbed the ‘perfect’ emerging market for investment

Amid the formation of another stable government in New Delhi led by Prime Minister Narendra Modi, the World Bank recently predicted that India is set to remain the fastest-growing major economy globally in 2024, though its growth rate is expected to slow.

With the World Bank’s predictions, India has been dubbed the “perfect” emerging market to invest in, but it can be tricky for those outside the South Asian nation to gain access, as reported by CNBC.

The June ‘Global Economic Prospects’ report maintained the GDP growth forecast for the South Asian country at 6.6 percent for FY25, reports said. 

The World Bank, in its latest Global Economic Prospects report, attributed the revision in India’s growth projections to strong public investment accompanied by private capex and rise in private consumption.

“This moderation is mainly due to a slowdown in investment from a high base. However, investment growth is still expected to be stronger than previously envisaged and remain robust over the forecast period, with strong public investment accompanied by private investment,” the report published by the international financial institution said.

The World Bank, in April, increased its projection for India’s GDP growth by 20 basis points to 6.6 percent for the current financial year, while after a robust performance in FY24, the global agency projected an average growth rate of 6.7 percent (6.7 percent in FY26 and 6.8 percent in FY27) annually over the three fiscal years starting from FY25, as outlined in its Global Economic Prospects for June 2024.

According to reports, India’s GDP growth, in the January-March quarter, surpassed expectations, touching 7.8 percent, although this was a decline from 8.4 percent in the third quarter. 

As per data released by the Ministry of Statistics and Programme Implementation in May, the GDP growth for the entire fiscal year 2023-24 has been revised upwards to 8.2 percent from the second advance estimate of 7.6 percent.

Meanwhile, the Reserve Bank of India (RBI), in its recent Monetary Policy announcement forecasted GDP growth at 7.2 percent for Fiscal Year 2024-25, a rise from the earlier projection of 7 percent.

Showing the global scenario of economic growth, the World Bank’s latest Global Economic Prospects report highlighted that the global economy is showing signs of stabilisation in 2024, for the first time in three years. 

This stabilisation, however, remains weak compared to historical standards.

The GDP growth is now anticipated to be 2.6 percent for 2024-25 globally, a 20 basis point increase from the January estimate, while for FY26 and FY27, global growth is expected to be 2.7 percent amid modest growth in trade and investment.

The prediction suggests that over the next three years countries representing over 80 percent of the world’s population and GDP will experience slower growth compared to the pre-pandemic decade.

According to the report, India, the largest economy in South Asia, has significantly contributed to regional growth, particularly through its manufacturing and services sectors. 

India’s growth rate for FY24 is estimated at 8.2 percent, a notable increase of 1.9 percentage points from earlier projections, the report said, adding that the fiscal deficit in the country relative to GDP is projected to decrease due to increased revenues from a broadened tax base.

The South Asian major’s economic growth has been driven by its industrial and services sectors, which have offset a slowdown in agricultural production caused by monsoon disruptions, said the report, adding that domestic demand remains strong, buoyed by infrastructure investments, even as post-pandemic pent-up consumption demand eases. 

Inflation in India has remained within the country’s central bank’s target range of 2-6 percent since September 2023, contributing to a stable economic environment, as per the report.

As per reports, India is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

The Indian economy remained resilient with a robust 7.6 percent growth rate of GDP in FY 2023-24 over and above 7 percent growth rate in FY 2022-23. 

According to the World Economic Forum, India has been a key growth engine for the world, contributing 16 percent to the global growth in 2023.

The International Monetary Fund (IMF) has raised India’s growth forecast for 2024-25 to 6.8 percent from 6.5 percent on the back of strong domestic demand and a rising working-age population. 

According to the PHD Chamber of Commerce and Industry (PHDCCI), India’s economy is poised to grow between 8-8.3 percent in the current fiscal year emphasizing the country’s robust growth fundamentals, projecting an average GDP growth rate of 6.7 percent over the next 23 years.

Double-digit growth rate of Construction sector (10.7 percent), followed by a good growth rate of Manufacturing sector (8.5 percent) have boosted the GDP growth in FY 2023-24, while private consumption in in the first half of FY 2023-24 was the highest since FY15 and this led to a boost to production activity resulting in enhanced capacity utilisation across sectors, according to reports.

Forbes last month reported, citing Paris-based OECD’s (Organisation for Economic Co-operation and Development) latest figures and forecasts, that India’s growth rate will remain at 6.6 percent in FY 2025-26.