In a recent interview with India Today, Dr. Gita Gopinath, Deputy Managing Director of the International Monetary Fund (IMF), shared her positive outlook on India’s economic future. She believes that India could become the world’s third-largest economy by 2027. Dr. Gopinath said that India’s economy grew more than expected last year, resulting in improved forecasts for the current year.
She pointed out that a large part of this positive outlook comes from increased private spending. “Last year, private spending grew by about 4 per cent, but we expect it to grow further, especially due to improvements in rural areas,” Dr. Gopinath said. She pointed to rising sales of two-wheelers and fast-moving consumer goods as signs of this improvement.
Dr. Gopinath also mentioned that a good monsoon season has led to better harvests, which should boost agricultural incomes. This increase in income is expected to increase spending in rural areas. These factors have led the IMF to raise its growth expectations for India.
The IMF has raised India’s growth forecast for the financial year 2024-25 to 7 per cent in its latest World Economic Outlook report. This new forecast is based on favourable weather as well as strong data from sectors such as FMCG and two-wheeler sales. Interestingly, this estimate is higher than the Indian government’s estimate of 6.5 per cent, as stated in the Economic Survey.
The IMF report also highlights that growth in emerging markets, especially Asia, is being led by strong activity in China and India. “India’s growth forecast this year has been raised to 7 per cent due to last year’s strong growth and better prospects for spending in rural areas,” the report said.