Moody’s Analytics has said that India’s domestic economy is the main engine of its growth, not trade. Apart from this, he has said that the slowdown in economic activity last year will be only temporary.
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Moody’s Analytics has said that India’s domestic economy is the main engine of its growth, not trade. Apart from this, he has said that the slowdown in economic activity last year will be only temporary. Data released by the government last week showed that India’s GDP growth has come down to a three-quarter low of 4.4 per cent during October to December 2022. The main reason behind this is the decline in manufacturing and less expenditure on private consumption.
Why the decline in growth?
Where there has been a decline of 1.1 percent in the manufacturing sector. At the same time, the expenditure on personal consumption declined by 2.1 per cent in the October-December quarter of the current financial year. In its outlook report on emerging markets, Moody’s Analytics said growth slowed significantly from a year ago, with total GDP from private consumption contracting in the second quarter of 2021 for the first time since the delta wave jolted the economy.
Moody’s further said that the economic slowdown at the end of last year would be temporary and would help ease some of the demand-related pressures. On the external front, better growth in the US and recovery in Europe will propel India to the mid-year numbers.
Moody’s raised the growth forecast
Earlier, Moody’s Investors Service raised India’s economic growth forecast for 2023 to 5.5 per cent from 4.8 per cent. This increase was done in view of the sharp increase in capital expenditure in the budget and better economic conditions. Moody’s, however, cut India’s growth forecast for 2022 to 6.8 per cent from 7 per cent earlier. Moody’s raised growth forecasts for several G20 economies, including the US, Canada, Europe, India, Russia, Mexico and Turkey, in the February update of the Global Broad Outlook 2023-24. This increase was done due to the strong end of the year 2022.
Moody’s said that in the case of India, there was a sharp increase in the allocation for capital expenditure (3.3 per cent of GDP) in the budget for the financial year 2023-24. This figure has increased from Rs 7,500 billion in the last financial year to Rs 10,000 billion.
