Global rating agency Moody's has now increased India's gross domestic (GDP) growth forecast to 7.1% for the calendar year 2024. Earlier, Moody's had increased India's GDP growth forecast from 6.1% to 6.8%.
At the same time, Moody's has maintained its estimate of India's GDP growth at 6.5% for 2025. Apart from this, the agency has estimated India's GDP growth for 2026 to be 6.6%.
In June, Moody's said that India's economy will slow down to 6.2% in 2026. The firm has also predicted better inflation results. Not only this, the agency has also reduced India's inflation forecast from 5% to 4.7%.
India's inflation forecast for 2025 is 4.5% India's inflation remained below 4% in July and August. The agency has projected India's inflation to be 4.5% and 4.1% in 2025 and 2026. RBI expects inflation to fall to 4.5% in FY 2025.
According to media reports, the central bank is unlikely to make any change in rates in the upcoming meeting. The first rate cut of 25 basis points is likely to happen in December.
At the same time, the Federal Reserve Bank of America recently cut the policy rate by 50 basis points to allay fears of recession.
What is GDP? GDP is one of the most common indicators used to track the health of the economy. GDP represents the value of all goods and services produced within a country during a specific time period. It also includes goods produced by foreign companies within the country's borders.
There are two types of GDP There are two types of GDP. Real GDP and Nominal GDP. In real GDP, the value of goods and services is calculated on the base year's value or constant price. Currently, the base year for calculating GDP is 2011-12. Whereas nominal GDP is calculated on current prices.
How is GDP calculated? A formula is used to calculate GDP. GDP=C+G+I+NX, where C stands for private consumption, G stands for government spending, I stands for investment and NX stands for net exports.
What is GVA? In simple terms, GVA shows the total output and income of an economy. It tells how much rupees' worth of goods and services were produced in a given period after deducting the input cost and the price of raw materials. It also tells how much production has taken place in a particular area, industry or sector.
From the perspective of national accounting, the figure obtained after deducting subsidy and tax from GDP at macro level is GVA. If you look at the production front, you will find it to be an item that balances the national accounts.
Graphics Source: VaskarAssets
