Moody’s Forecasts India to Lead G20 Nations in Growth

Swift Summary

• India’s Growth Projection: Moody’s predicts India’s economy will grow at 6.5% in the 2025-26 fiscal, making it the fastest-growing among G-20 nations.
• Current Fiscal Outlook: Growth for the 2024-25 fiscal year is projected too be higher at 6.7%.
• inflation Trends: Inflation is forecasted to average 4.5% in 2024-25, lower than the previous year’s average of 4.9%.
• Policy Measures Supporting Growth:

– Indian goverment raised income tax rebate threshold from Rs 7 lakh to Rs 12 lakh, providing a tax relief of Rs 1 lakh crore.
– RBI cut interest rates by 25 basis points in February (down to a rate of 6.25%) and may announce further cuts soon.

• Resilience Amid Uncertainty:

– India has robust financial buffers like moderate policy credibility, deep domestic capital markets, significant foreign exchange reserves, and a low external vulnerability indicator (61%).
– A higher share of external debt denominated in domestic currency protects against currency-related risks.

Indian Opinion Analysis

India’s economic resilience continues to shine amid global uncertainties despite challenges posed by shifting U.S. policies affecting capital flows and trade globally. Moody’s optimistic projections reflect confidence in India’s robust domestic-driven growth model supported by proactive monetary easing and middle-class focused tax reforms.

The strategic increase in income tax rebates signifies an approach toward stimulating consumer demand while ensuring financial inclusion through eased burden on taxpayers-a measure likely contributing positively toward sustained GDP growth rates over coming years.

Additionally, RBI’s timely adjustments on interest rates provide vital buffer zones against potential international economic headwinds caused by tighter global monetary conditions or geopolitical instabilities elsewhere attracting inward investments prioritization alignment National-prided transparency platforms boost national protection safeguards sustainably enriched strategized implementation cycles optimized obvious process intent policymakers .

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