Moody's Investors Service has raised India's Gross Domestic Product (GDP) growth estimate for 2023 to 5.5 per cent from 4.8 per cent pegged earlier, on the back of a sharp increase in capital expenditure in the Budget and a resilient economic momentum. However, it revised downwards India's growth estimate for 2022 to 6.8 per cent from 7 per cent pegged in November last year.
Moody's said the upward revisions additionally incorporate 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. It also said India's growth projection has been meaningfully raised as strong data in the second half of 2022 created large carry-over effects for 2023.
It further 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 anticipated. It noted that an eventual let-up in monetary policy tightening in the US will help stabilise, if not improve, capital flows to emerging market countries. However, it said until inflation in advanced economies is firmly in check, emerging markets will remain vulnerable to bouts of heightened financial market volatility.
