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India Economy: Rating agency Moody’s estimates that the Indian economy will grow at a rate of 6-6.3 per cent in the quarter ending June 1 of the current financial year (2023-24). Along with this, Moody’s has also expressed the possibility of ‘slippery’ on the fiscal front due to the government’s revenue being less than expected. Moody’s growth rate forecast is much lower than the Reserve Bank of India’s estimate of eight per cent for the first quarter of 2023-24.
What did Jean Fang, Associate Managing Director of Moody’s Investor Services say?
Jean Fang, Associate Managing Director of Moody’s Investor Services, said that India’s general government debt for 2022-23 has been at a very high level of 81.8 per cent of gross domestic product (GDP), while the debt capacity is much lower than this. He said that India has the potential to achieve high growth and its strength lies in the stable domestic financial base and strong external position for government debt. Fang said, “We estimate that India’s growth rate in the first quarter of the current financial year will be around 6-6.3 per cent, which is around 6.1 per cent growth recorded in the last quarter of the financial year 2022-23.”
India is a large and diversified economy – Fang
With inflation coming down, we expect household demand to improve, Fang said. Fang said India’s strength with a sovereign rating of ‘Baa3’ is its large and diversified economy, which has the potential to achieve high growth rates. This can be gauged from the strong growth forecast amid a weak global economic scenario. Fang said that the government’s general government debt has been 81.8 percent of GDP in 2022-23, which is very high. Its average for places with BAA rating is 56 per cent.
Fiscal deficit has come down – Fang
He said the government has comprehensively achieved its fiscal targets in the last two years, allaying concerns over fiscal policy. The government’s fiscal deficit has come down to 6.4 per cent of gross domestic product (GDP) in 2022-23 from 6.7 per cent in 2021-22. The difference between government expenditure and revenue is called fiscal deficit. In the current financial year, the target of fiscal deficit has been kept at 5.9 percent. “As the government balances its commitment to long-term fiscal stability against high inflation and weak global demand and its more immediate priority to support the economy ahead of general elections in May 2024, we must There seems to be a possibility of slippage on the fiscal front.
Here is Moody’s forecast for India
Moody’s estimates that the growth rate of the Indian economy will be 6.1 percent in the entire 2023-24 financial year, while it will reach 6.3 percent in the next financial year. On a calendar year basis, Moody’s expects growth to remain at 5.5 per cent in 2023, rising to 6.5 per cent in 2024.
This estimate has been given in the policy of RBI
Last week, the Reserve Bank of India in the monetary policy review has estimated the growth rate to be at 6.5 per cent in the current financial year. The Reserve Bank estimates that the growth rate in the first quarter of the current financial year will be eight percent. It will be 6.5 percent in the second quarter, 6 percent in the third and 5.7 percent in the fourth quarter.
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