Domestic engines to power India: IMF

Resilient demand to lift growth to 6.7% this fiscal, says outlook

The International Monetary Fund (IMF) on Tuesday said India will grow faster than its previous projections in this fiscal year and the next on the back of strong domestic demand, even as it sees the global economy headed for a soft landing.

In an update to its World Economic Outlook, the multilateral agency raised its growth projection for India to 6.7% and 6.5% for FY24 and FY25, respectively, against 6.3% earlier projected for both years. The IMF, which also revised India's FY26 forecast to 6.5%, up by 20 basis points, said high-interest rates aimed to counter inflation and the withdrawal of fiscal support amid high debt may weigh on growth in FY25.

"Growth in India is projected to remain strong at 6.5% in both 2024 (FY25) and 2025 (FY26), with an upgrade from October of 0.2 percentage points for both years, reflecting resilience in domestic demand," the IMF said. For India, data and projections are presented by the IMF on a fiscal year (FY) basis, with FY24 (starting in April 2023) shown as 2023 by the agency.

The IMF report, titled 'Moderating Inflation and Steady Growth Open Path to Soft Landing', attributed India's upgrades to stronger-than-expected growth in 2023 and increased government spending on capacity building against natural disasters.