Moody's ups India's growth projection for 2023 to 5.5% on higher capex Budget

NEW DELHI: Moody’s Investors Service has increased India’s economic growth forecast for 2023 to 5.5 per cent from 4.8 per cent earlier, citing a strong rise in capital spending in the Union Budget and a robust economic recovery.
However, it has lowered India’s growth outlook for 2022 to 6.8 per cent from 7 per cent projected in November last year.
In its Global Macro Outlook 2023-24 update for February, Moody’s revised up its baseline 2023 real growth estimates “significantly” for several G20 economies, including the US, Canada, the Euro area, India, Russia, Mexico, and Turkiye, reflecting a stronger end to 2022.
“In India’s case, the upward revisions also take into account the sharp increase in capital expenditure budget allocation to Rs 10 trillion (3.3 per cent of GDP) for fiscal year 2023-24, up from Rs 7.5 trillion for the fiscal year ending in March 2023,” Moody’s said while projecting a 70 basis points rise in 2023 real GDP growth at 5.5 per cent and 2024 growth at 6.5 per cent.
It said India’s growth projection has been “significantly raised” as solid data in the second half of 2022 created large carry-over effects for 2023.
Moody’s said economic momentum in a number of large emerging market countries, including India, has proved more resilient to last year’s tightening in the global and domestic financial environment than it had expected.
An eventual let-up in monetary policy tightening in the US will help stabilise, if not improve, capital flows to emerging market countries. However, until inflation in advanced economies is firmly under control, emerging markets will remain vulnerable to bouts of heightened financial market volatility, it said.
Regarding global growth, Moody’s said the year 2023 started on a seemingly optimistic note for the global economy following positive surprises on several fronts, including the lifting of Covid-related restrictions in China, unseasonably warm weather that has helped.