New Delhi

Moody's Investor Service has revised its gross domestic product (GDP) forecast for India, citing the impressive performance of the South Asian economy in recent quarters. 

The ratings agency now anticipates a sturdy growth trajectory extending into 2024. 

"India's economy has performed well, and stronger-than-expected data in 2023 has caused us to raise our 2024 growth estimate to 6.8 per cent from 6.1 per cent," Moody's stated. 

They also noted that India is confident to maintain its status as the fastest-growing economy among G-20 nations over the forecast period.

India witnessed its economy expanding at its swiftest pace in a year and a half during the final quarter of 2023, driven notably by robust manufacturing and construction activity. 

The recorded growth rate of 8.4 per cent exceeded economists' projections of 6.6 per cent. 

Moody's pointed out that the momentum from the third and fourth quarters of 2023 has seamlessly flowed into the first quarter of the current calendar year, as evidenced by high-frequency indicators.

"Robust goods and services tax collections, rising auto sales, consumer optimism, and double-digit credit growth suggest urban consumption demand remains resilient," Moody's observed. 

Moreover, indicators on the supply side such as expanding manufacturing and services PMIs further boosted the evidence of solid economic momentum. 

The agency stressed the continuation of policies post the upcoming general elections expected by May, along with a sustained emphasis on infrastructure development.

Although private industrial capital spending has been sluggish, Moody's expects a rebound, fueled by ongoing benefits from supply chain diversification and the government's initiatives to bolster key manufacturing sectors. 

The agency puts a spotlight on rising capacity utilisation, strong credit growth, and upbeat business sentiment as indicative of an improving outlook for private investment. 

However, it noted that headline inflation in January eased slightly to 5.1 per cent but remains above the central bank's target of 4 per cent. 

Moody's suggested that given the solid growth dynamics and inflationary pressures, policy easing is not anticipated in the near term. 

(With inputs from Reuters)