Year 2023 saw the global geopolitical situation deteriorating with the worsening Russia-Ukraine crisis, the Israel-Gaza conflict and the Red Sea blockade. However, India withstood the global gust resulting from disrupted supply chains and rising food prices by leaning on high demand, moderate inflation, stable interest rate and strong foreign exchange reserves.
India's GDP grew 6.1 per cent in the first quarter while it significantly soared up to 7.8 per cent in the second quarter, keeping the growth for the first half of the fiscal at 7.7 per cent.
It remained in the region of 7.6 per cent in the third quarter and the growth momentum is expected to be maintained in the final quarter ending in March.
According to RBI, "despite significant global headwinds, the Indian economy remained the fastest growing major economy in 2023. The outlook is one of cautious optimism as consumer confidence remains positive and perceptions about current income turned up in the RBI's latest survey of households in November 2023".
India will continue to be the fastest-growing major economy in the world, with the latest projections of the Organization for Economic Cooperation and Development (OECD) pinning the the country's growth at 6.3 per cent in 2023. On the other hand, other major economies like China and Brazil are expected to grow at 5.2 per cent and 3 per cent respectively.
OECD believes that India will grow at 6.1 per cent in 2024 compared to 4.7 per cent growth predicted for China.
Developed nations like the US, UK and Japan might either undergo deceleration or very nominal rise in economic growth next year.
The International Monetary Fund's (IMF) World Economic Outlook estimates that global growth would decelerate from 3 per cent in 2023 to 2.9 per cent in 2024.
Indian economy has "shown great resilience despite many external shocks,” Ashima Goyal, Member of the Reserve Bank of India's Monetary Policy Committee (MPC), told PTI, adding that, “This is due to increasing economic diversity and the role of policy in smoothing shocks".
Another MPC member, Jayanth R. Varma, told the agency, "After a couple of difficult years, the economic environment is turning more benign with inflation trending down and growth remaining robust. Most forecasts project that growth in 2024-25 would be close to but slightly lower than in 2023-24. The global slowdown and geopolitical uncertainty remain the biggest risks to growth.|
The RBI, going by its policy of remaining "actively disinflationary", has kept the short-term interest rate or repo rate unchanged at 6.5 per cent since February 2023.