India's Economic Growth Forecast Remains Strong Amid Global Slowdown

India's Economic Outlook

New Delhi, Aug 14: India continues to be one of the top-performing economies globally, with expectations for sustained growth dynamics in the medium term. According to S&P Global, the country's GDP is projected to grow by 6.8 percent annually over the next three years.

The Indian government is focusing on fiscal consolidation, showcasing its commitment to maintaining sustainable public finances while also pushing forward with significant infrastructure initiatives.

"We anticipate India's real GDP growth to be 6.5 percent this year, which is favorable compared to other emerging markets amid a general global economic slowdown," the ratings agency noted.

The robust economic growth is positively influencing India's credit metrics, and the agency expects strong economic fundamentals to support growth momentum in the coming two to three years. Furthermore, the current monetary policy is increasingly effective in managing inflation expectations.

Over the past five to six years, the quality of government spending has seen improvements, with the current administration prioritizing infrastructure investments. The Union government's capital expenditure is set to rise to INR 11.2 trillion, approximately 3.1 percent of GDP, by fiscal 2026, up from 2 percent a decade ago.

When including capital spending from states, total public investment in infrastructure is projected to reach around 5.5 percent of GDP, comparable to or exceeding that of other sovereign nations.

"We believe that advancements in infrastructure and connectivity will alleviate bottlenecks that currently impede long-term economic growth," the global ratings agency stated.

The shift to an inflation-targeting monetary policy has yielded positive results, with inflation expectations now more stable than they were ten years ago. Between 2008 and 2014, India experienced multiple instances of double-digit inflation.

In the last three years, despite fluctuations in global energy prices and supply chain disruptions, the Consumer Price Index (CPI) growth averaged 5.5 percent, recently remaining within the Reserve Bank of India's target range of 2 percent to 6 percent.

These factors, along with a robust domestic capital market, indicate a more stable and supportive monetary environment.