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Informist, Saturday, Nov. 16, 2024

 

NEW DELHI – India's high-frequency data suggests that the country's economic momentum was steady in the quarter ended September, Moody's Ratings said in a report Friday. The observation by the rating agency comes amid concerns of an economic slowdown, especially after the Reserve Bank of India cut its growth projection for Jul-Sept to 7.0% from an earlier estimate of 7.2%.

 

The finance ministry had also noted in its Monthly Economic Review for September that moderating urban demand is a concern. The National Statistical Office is likely to release data on India's GDP growth for the September quarter on Nov. 29.

 

Going ahead, Moody's expects India's household consumption to grow on account of higher spending during the festive season, and rural demand to see a sustained pickup on the back of an improved agricultural outlook. "Indeed, from a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation," Moody's said in its Global Macro Outlook for 2025-26 (Apr-Mar). 

 

The rating agency has forecast India's GDP to grow 7.2% in the current calendar year, followed by 6.6% in 2025 and 6.5% in 2026. 

 

"Additionally, rising capacity utilisation, upbeat business sentiment and the government's continued thrust on infrastructure spending should support private investment," the report said. "Sound economic fundamentals, including healthy corporate and bank balance sheets, a stronger external position and ample foreign exchange reserves also bode well for the growth outlook."

 

Moody's also sees India's retail inflation moderating towards the RBI's target band of 2-6% in the coming months on easing food prices amid higher sowing and adequate grain buffer stocks. The CPI print for October breached the central bank's target range to gallop to a 14-month high of 6.21% due to a sharp rise in food inflation.

 

"Even so, potential risks to inflation from heightened geopolitical tensions and extreme weather events underscore the RBI's cautious approach to policy easing," the report said. The central bank may retain its relatively tight monetary policy settings into next year given the fairly healthy growth dynamics and inflation risks, as per the rating agency.  

 

In RBI's last policy meeting in October, the Monetary Policy Committee had shifted its stance to "neutral" from "withdrawal of accommodation" while keeping the repo rate unchanged at 6.50%.  End

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

 

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