IMF Cuts India’s Growth Forecast

Revised Projections

The IMF lowered India’s 2023–24 GDP forecast from X% to Y%, indicating a moderation despite still-leading growth among major economies.

Global Alignment

Similar cuts by the World Bank and Asian Development Bank reflect shared concerns over slowing global demand.

Key Drivers of the Forecast Cut

Global Slowdown

Weaker demand in the US and Europe, plus high inflation abroad, has weighed on India’s exports.

Tight Monetary Policy

RBI rate hikes, while taming inflation, have curbed private consumption and investment.

Domestic Challenges

Manufacturing softness, monsoon disruptions, and lagging rural demand have further constrained growth.

External Shocks

Volatile energy prices and rupee depreciation have inflated import costs and narrowed fiscal space.

Sectors Feeling the Impact

Exports

IT services, textiles, and auto parts have slowed as global trade cools.

Manufacturing

Rising input costs and weaker demand have held back factory output and capacity utilisation.

Infrastructure

Higher rates and material costs have tempered, but not stopped, government-led projects.

Reasons for Optimism

Services Resilience

IT and fintech sectors continue to grow on strong global digital demand.

Domestic Consumption

A rising middle class and improving wages cushion against external headwinds.

Policy Reforms

"Make in India" and PLI schemes attract investment and bolster manufacturing.

Green Energy Push

Ambitious renewable targets draw foreign capital into clean technology.

Looking Ahead

Stimulus Measures

Targeted fiscal support can reignite rural demand and private investment.

Boosting Exports

Trade deals and tax incentives will help counter weak global markets.

Controlling Inflation

A mix of monetary and supply-side actions is needed to stabilise prices.