The Deputy Managing Director of the International Monetary Fund (IMF), Dr Gita Gopinath, has said that she is hopeful of India becoming the third-largest economy by 2027.
In a conversation, Gopinath said India’s growth did much better than expected during the last fiscal year and that those carryover effects are affecting our forecast for this year. “The other factor is we see private consumption recovering,” she said.
She said, “Last year, if you look at private consumption growth, it was around 4 per cent. We expect that to increase, driven by the recovery in rural consumption. We’re already seeing that if you look at two-wheeler sales and at the so-called fast-moving consumer good sales. You’re seeing that coming back up.”
Gopinath went on to add, “The better monsoons that have happened, we expect will generate better harvests. And because of that, with agricultural incomes going up, we should see a recovery in rural consumption. So those are the two factors behind our upgrade.”
Her latest remarks come after the IMF, in its ‘World Economic Outlook’ report, increased India’s growth projection for the financial year 2024-25 to 7 per cent. The revised growth projection was based on new data for FMCG and two-wheeler sales and a favourable monsoon. Interestingly, this projection is more bullish than the 6.5 per cent projection of the Union government in the economic survey.
“The forecast for growth in emerging markets and developing economies has been revised upward; this increase is powered by stronger activity in Asia, particularly China and India. The forecast for growth in India has also been revised upward to 7 per cent this year, reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” the IMF report stated.
