• India‘s major economy is expanding at the quickest rate in the world in 2023.
• The OECD projects that China will grow at 4.7% and India at 6.1% in 2024.
• India’s economic success in 2023 looks even more impressive.

Despite global challenges and a deteriorating geopolitical environment, India’s major economy is expanding at the quickest rate in the world in 2023. In the quarters ending in March, June, and September, the GDP of the nation expanded by 7.8%, 6.1%, and 7.6%, respectively.

India’s economy is predicted to develop at the quickest rate in the world in the upcoming quarter, December. India is expected to develop at a rate of 6.3% in 2023, ahead of China and Brazil, which are expected to grow at 5.2% and 3.5%, respectively, according to the Organization for Economic Cooperation and Development (OECD).

India’s economy

The OECD projects that China will grow at 4.7% and India at 6.1% in 2024. In the upcoming year, it is anticipated that major economies such as the US, UK, and Japan will either have a nominal increase in economic growth rates or a deceleration.

Seen in a worldwide context, India’s economic success in 2023 looks even more impressive. According to the World Economic Outlook report by the International Monetary Fund, global growth would slow down from 3.5% in 2022 to 3.5% in 2023 and then to 2.9% in 2024.

India’s retail inflation peaked in July at 7.44%, and the DSGE model of the central bank projects that the country’s current 4.9% fiscal rate will drop to 4.8%. Since February, the Reserve Bank of India (RBI) has maintained its 6.5% short-term interest rate in line with its ongoing commitment to being “actively disinflationary.”

Shaktikanta Das, the governor of the RBI, chose to maintain the status quo in the policy rate starting in April 2023, thus ending the cycle of rate hikes in May 2022.

In 2024, the Reserve Bank might contemplate lowering interest rates if retail inflation stays within the designated range of 2 to 6% and if geopolitical reasons such as the conflict between Israel and Gaza, the war in Ukraine, and the closure of the Red Sea route do not cause a sharp increase in the price of crude oil.

The current account deficit decreased from 3.8% of GDP in the same quarter last year to 1% of GDP in the September 2023 quarter, demonstrating a notable improvement. The global economic slowdown and geopolitical environment will dictate whether the growth rate is skewed toward the lower or higher end.