Moody's changes the calendar of fiscal year 2023, increasing India's growth rate estimate to 6.7 percent

Moody's Investors Service on Friday changed India's growth forecast. India's growth forecast for calendar year 2023 may increase by 6.7 percent due to the country's strong economic momentum. Moody's has given this information in its Global Macro Outlook.

He said in his Global Macro Outlook that a strong services sector and capital expenditure helped the first quarter growth rate to reach 7.8 percent. In such a situation, the growth forecast for the calendar year 2023 has been increased from 5.5 percent to 6.7 percent. In this, he also recognizes the risk of going ahead for India's economic growth performance, given the strong underlying economic momentum.

The improved Q2 performance builds a higher base in 2023, according to Moody's. In such a situation, Moody's has reduced the growth forecast for the year 2024 from 6.5 percent to 6.1 percent.

India's monsoon season, which runs from June to October, may also see below-average rainfall. As a result, food prices may increase. The India Meteorological Department has projected a nationwide rainfall deficit of 9 percent by 29 August 2023.

At the same time, Moody's said that if this year's El Nino comes in the second half of 2023, then the prices of agricultural commodities may increase.

The Monetary Policy Committee of the Reserve Bank of India (RBI) kept the repo rate unchanged for the third time in August. Also, the recent rise in food price inflation and uncertain El Nino-related weather conditions will delay the consideration of monetary policy easing early next year.

In such a situation, Moody's said that domestic demand in India remains strong and so long as core inflation will also remain relatively stable. Because of this, there is no possibility of an increase in rates.