India’s GDP 2024 Forecast

Data-driven insights help businesses better understand their customers and deliver tailored products and services, thus improving customer experiences and increasing loyalty and retention.

India’s productivity gains will fuel consumer spending and capital Investment. Furthermore, favourable demographics and financial sector development will play a role in supporting stronger growth.

1. Macroeconomic Analysis

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2. Industry Analysis

Recent GDP and other Economic data show that India continues to buck global slowdown trends and outperform expectations, defying global slowdown trends and exceeding expectations. India’s resilience can be seen through purchasing managers’ indices, air passenger traffic levels and diesel consumption statistics; although headline inflation may have increased this year, it should begin declining as commodity prices decline and the Reserve Bank of India withdraws accommodative measures.

Indian economy remains domestic-demand driven, yet with high savings rates, investments, and productivity gains from technology catch-up, it holds enormous growth potential. The challenge now is unlocking that potential.

One avenue for India is to strengthen manufacturing, which would allow it to more effectively compete in global supply chains and generate jobs more efficiently. Reform of rigid labour laws would be key. Making investment easier for multinationals by cutting bureaucratic red tape and relaxing land ownership regulations are other approaches. Finally, using Aadhaar as a verification system online and physically could widen credit availability to small businesses in India.

India faces several risks that remain negative to its outlook, from low per capita income and its impact on populist economic policies, which could increase current expenditure and limit room for increased capital spending, to climate change, putting India’s vast coastlines at heightened risk of rising sea levels. Therefore, pushing ahead with reforms and productivity improvements remains key if India wants its economic growth to outstrip its potential.

3. Financial Analysis

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4. Investment Analysis

India faces the formidable task of achieving high growth over the coming decade, which requires capitalising on demographic dividends, increasing private investment and improving productivity while diversifying away from agriculture and low-value-added services to high-end manufacturing and global services.

To accomplish this goal, the government must invest in infrastructure and strengthen its financial health. Furthermore, it should foster innovation, increase competitiveness, and establish a dynamic domestic market. Furthermore, to address regional imbalances by supporting 75 million MSMEs to generate income generation in rural areas, it must adapt to global macroeconomic headwinds by diversifying export markets.

Short-term growth will come from revitalized agricultural and service sectors, driven by improved monsoon rainfall and weather conditions; domestic consumption and global outsourcing fuel the increase in services, while, over the long run, healthcare and elderly care must become higher value-added industries that grow faster due to ageing populations.

India has had impressive economic performance yet still faces serious structural obstacles that hinder growth and labour market rigidity. Furthermore, global headwinds, such as slowing emerging market growth and trade friction, significantly challenge India’s economic success. To overcome them, India will need to increase productivity by reducing its debt burden, adopting policies that enhance global competitiveness and investing in manufacturing while investing in digital infrastructure.

5. Consumption Analysis

An increasingly large portion of the economy relies on services, with consumer spending being the main driving force of economic expansion in 2024. Unfortunately, household savings could rise due to wealth effects and higher borrowing costs, potentially decreasing consumption growth relative to income and impeding overall economic activity.

However, the current pace of household investment is encouraging as it suggests that household demand won’t decline as dramatically as initially feared. This will help offset weakening global demand and waning exports, both of which threaten imports and GDP growth.

Consumption will also benefit from the rebound in housing services, which account for much of spending on durable goods. Yet growth in other durable goods may be slower than anticipated – this reflects their long-lived nature, meaning households tend to put off purchases during difficult economic conditions as businesses do.

However, core consumer price inflation has subsided as food inflation and used car, shelter, and medical service inflation have all decreased significantly. These trends align with our forecast that average inflation rates should moderate to around 2.5% by 2024.

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Analytics and Forecasting for India’s GDP in 2024

India has managed to weather global slowdown trends thanks to resilient domestic demand. Domestic consumption remains an important economic expansion source while services exports outperform expectations, helping cushion current account deficits.

The country should prioritize productively deploying its large population by increasing labour force participation, upskilling workforce members, and speeding up infrastructure and logistics development. Unfortunately, however, they face hurdles such as weak monsoon rainfall and rising inflation that must be overcome to be effective in doing this.

Demographics

According to UN estimates, India is projected to overtake China in population around 2024. India boasts a young working-age population that is predominantly English-speaking and known for entrepreneurship that draws global manufacturers into both cities and rural towns across its territory.

Demographic dividends will require more than just young workers for India to realize its full potential. As India expands, issues related to worker participation and access to education must also be tackled – particularly among migrant workers who constitute much of its labour force.

Domestic demand will likely serve as the cornerstone of growth in coming years, supported by steady expansion in contact-intensive services, above-average capacity utilization rates and moderating commodity prices. These factors should reduce net external demand’s drag during a global slowdown, in turn supporting investment and steadier increases in service exports while corporate debt burden reduction should improve bank lending rates; but their pace of expansion may slow over time due to various headwinds like global economic slowdown and tight monetary policy.

Innovation

India’s companies continue to innovate despite global demand decline, reflecting India’s large consumer base, large workforce and rising incomes.

Growing populations and rising disposable incomes are helping drive private consumption, which should boost growth by 2024. Furthermore, tourism recovery will stimulate the services sector.

Asian Development Bank (ADB) recently issued a report detailing how reducing India’s business costs will enable its economy to become more resilient against shocks. Furthermore, manufacturing operations must also be improved, according to this report.

The report noted that India could overtake China as the world’s top contributor to global GDP through rapid economic growth, but to do so will require increasing investments in traditional sectors with stronger spillover effects and shifting savings habits away from debt toward equity savings accounts. Furthermore, more foreign investments must also be attracted to sustain this momentum for continued development in India.

Capital Investment

India’s economic expansion in 2024 will be led by domestic demand. A large consumer base, rising incomes and aspirational aspirations will drive private consumption, while its size and business ecosystem make India an attractive investment destination for foreign investors.

Last quarter, the economy expanded at its fastest pace since 2016. Services activity rebounded after the pandemic outbreak, and manufacturing production recovered after lower-than-expected output in the previous quarter. Furthermore, declining input prices–such as wholesale and fuel costs–should further contribute to rising industrial production levels over time.

Finance Minister Nirmala Sitharaman raised capital investment outlay by 33% in her inaugural full budget presentation, potentially stimulating manufacturing and construction sectors. Furthermore, her budget highlighted digitalization efforts, which should result in efficiency gains as well as lower costs for companies. Unfortunately, slow global economic growth and increasing interest rates may continue to hinder exports and investments, potentially derailing the country’s economic expansion by 2024.

Inflation

Inflation should remain within the RBI’s target range of 4% in 2024, helping support growth for another year. Indeed, economic recovery has been stronger than anticipated, and investment banks have upgraded their 2024 GDP growth forecasts accordingly.

According to official data, India’s economy expanded at an impressive annualized rate of 7.8 percent during the first quarter of FY24. This remarkable rate was driven by increased investment and domestic demand growth.

India remains exposed to risks despite optimistic projections, including those associated with below-normal monsoon rainfall, which could hamper agricultural expansion; additionally, slower global economic expansion could significantly diminish India’s growth momentum.

The government is actively taking steps to combat these challenges and keep the economy on course. They need to increase investment in traditional sectors with stronger spillover effects on the broader economy – this will create jobs and raise household incomes while positioning India to become a global economic powerhouse in future years.

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