New York-based Moody’s Ratings on Thursday raised its forecast for India’s GDP growth for 2024 to 7.2 per cent from 6.8 per cent as projected earlier on the back of stronger private consumption driving up aggregate demand in the economy.

“Household consumption is poised to grow as headline inflation eases toward the RBI’s target. Indeed, signs of a revival in rural demand are already emerging on the back of improving prospects for agricultural output amid above-normal rainfall during the monsoon season,” the global rating agency said.

“These forecast changes assume strong broad-based growth and we recognise potentially higher forecasts if the cyclical momentum, especially for private consumption, gains more traction,” Moody’s said.

Moody’s upgraded forecast matches the RBI projection of 7.2 per cent growth for the Indian economy for 2024-25, which factors in rising rural and urban demand as a driver of growth.

The RBI in its growth projection had cited the pick-up in the monsoon which would lead to stronger growth in the farm sector, and higher rural income as a factor that would drive up the growth rate.

Moody’s also cited strong performances in the industrial and services sector, indicated by the Purchasing Managers’ Index, as an indicator of higher growth momentum.

The Indian economy is expected to grow faster at 6.6 per cent in 2025 as well, compared to the 6.4 per cent growth projected earlier, Moody’s said.

“Over the medium and longer-term, India’s growth prospects depend on how well the country can productively tap its substantial pool of labour. It should be possible for the economy to post 6-7 per cent growth, sheerly on the basis of the present conditions,” Moody’s stated.

“India’s external position has also strengthened in recent years amid a marked narrowing of its current account deficit,” the rating agency said.

“Global growth is stabilising and inflation in most markets is close to the central bank targets. We expect global growth will slow to 2.7 per cent and 2.5 per cent in 2024 and 2025, respectively, from 3 per cent in 2023, though growth trends differ across countries,” Moody’s said.

The rating agency also predicted countries to move from cyclical recovery to expansionary phase.

Apart from ongoing geopolitical conflicts, the report viewed the deteriorating US economic outlook as the most immediate risk to the global economy going ahead.

RBI Governor Shaktikanta Das had said at the monetary policy review on August 8 that taking all the factors into consideration, the country’s real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.1 per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent.

Real GDP growth for Q1 2025-26 is projected at 7.2 per cent, he said.