Ahead of Budget, IMF raises India’s GDP growth projection to 6.5% for FY25

Ahead of the Interim Budget, the International Monetary Fund (IMF) on Tuesday raised India's GDP growth projections by 20 basis points to 6.5% for FY25, owing to resilience in domestic demand. The global organisation expects the country's GDP to grow by 6.7% in FY24 as against 6.3% estimated in its October forecast. 

"Growth in India is projected to remain strong at 6.5% in both 2024 and 2025, with an upgrade from October of 0.2 percentage point for both years, reflecting resilience in domestic demand," IMF says in its latest World Economic Outlook (WEO) report.

In contrast to this, the GDP growth in emerging and developing Asia is expected to decline from an estimated 5.4% to 5.2% in FY24 and 4.8% in FY25, as per the IMF report. The GDP growth in China is projected to be at 4.6% in 2024 and 4.1% in 2025, with an upward revision of 0.4%  for 2024, says the IMF report.

"Growth in China is projected at 4.6% in 2024 and 4.1% in 2025, with an upward revision of 0.4 percentage point for 2024 since the October 2023 WEO. The upgrade reflects carryover from stronger-than expected growth in 2023 and increased government spending on capacity building against natural disasters," says IMF.

IMF's GDP growth projection for India comes two days after the finance ministry in its review released earlier this week projected the country's GDP growth to be at 7% in FY25. Earlier this month, the Reserve Bank of India (RBI) and RBI Governor Shaktikanta Das also projected the country’s GDP to grow 7% in FY25.

"I am saying this on the basis of the strong momentum of economic activity seen in India. Consequently, growth would be 7% and above for four consecutive years starting from FY 2021-22," Das had said on the sidelines of the World Economic Forum in Davos.

Notably, for FY24, the first advance estimates released by the statistics and programme implementation ministry’s (MoSPI) national statistical office, projects the country’s GDP growth to be at 7.3%, as compared to 7.2% during the last financial year, with construction seeing double digits growth of 10.7% this year. "Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to attain a level of ₹171.79 lakh crore, as against the Provisional Estimate of GDP for the year 2022-23 of ₹160.06 lakh crore, released on 31st May 2023. The growth in real GDP during 2023-24 is estimated at 7.3 per cent as compared to 7.2 per cent in 2022-23," the NSO said.

Meanwhile, the United Nations in its World Economic Situation and Prospects 2024 report projects India’s GDP growth to be at 6.2% in 2024, slightly lower than the 6.3% estimate for 2023, amid robust domestic demand and strong growth in the manufacturing and services sector.