Economic Overview
India is the world’s fifth-largest economy. After experiencing robust performance in 2022 (+7.2%), real GDP growth was expected to decelerate to 6.3% in 2023 and 2024-25 due to adverse weather-related events and a deteriorating international outlook (IMF). The beginning of FY 2023-24 witnessed robust growth propelled by public investment and private consumption. Nonetheless, the global economic slowdown has adversely affected merchandise trade. The risks are tilted to the downside: while indicators indicate that India's growth remains stable at present, there are significant challenges arising from increased global uncertainty. Moreover, the delayed effects of domestic policy tightening persist, alongside disappointing trends in certain socio-economic indicators, such as consumer goods sales, particularly in rural areas.
Concerning public finances, according to data from the Controller General of Accounts (CGA), the government's fiscal deficit reached INR 9.06 lakh crore, accounting for 50.7% of the full-year budget estimate. In absolute terms, the fiscal deficit amounted to INR 9,06,584 crore during the April-October period of 2023-24. In comparison, during the corresponding period last year, the deficit stood at 58.9% of the budget estimates of 2022-23. For 2024, the IMF forecasts a budget deficit of 8.5%, with a reduction to 8% by 2025. Meanwhile, the debt-to-GDP ratio increased marginally to 81.9% in 2023 and is expected to further increase to 82.2% by 2025 (IMF). The tightening of monetary policy has effectively addressed inflationary pressures, albeit at the cost of dampening household consumption and corporate investment. Headline inflation eased in the first half of 2023, falling below the upper threshold of the central bank’s 2-6% target range by September. However, food and energy prices continue to be susceptible to weather conditions and geopolitical tensions. For the year as a whole, the IMF estimated an inflation rate of 5.5%, with a decrease expected over the forecast horizon (4.6% this year and 4.1% in 2025).
In April 2023, India overtook China’s mainland as the world’s most populous country. Moreover, India has the world’s largest youth population, nevertheless, according to the OECD, over 30% of India's youth are NEETs (not in employment, education or training). India continues to suffer from a low GDP per capita (USD 9,183 in 2023, PPP), and almost 25% of the population still lives below the poverty line (about one-third of the world’s population living on under USD 1.90/day lives in India). The country's inequalities are very strong: the richest 1% of the population own more than half of the country’s wealth. Additionally, the informal sector, where the vast majority of India’s labour force is employed, has been particularly affected by the COVID-19 pandemic, increasing their risk of slipping back into poverty. According to the CMIE, the unemployment rate in India, among persons aged 15 years and above, fell to 8.7% in December 2023 from 8.9% in the previous month. Although the unemployment rate eased in December, it remained at fairly high levels.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
| GDP (billions USD) | 3,389.69 | 3,732.22 | 4,105.38 | 4,511.85 | 4,951.62 |
| GDP (Constant Prices, Annual % Change) | 7.2 | 6.3 | 6.3 | 6.3 | 6.3 |
| GDP per Capita (USD) | 2,392 | 2,612 | 2,848 | 3,102 | 3,375 |
| General Government Balance (in % of GDP) | -9.3 | -8.8 | -8.5 | -8.0 | -7.7 |
| General Government Gross Debt (in % of GDP) | 81.0 | 81.9 | 82.3 | 82.2 | 81.8 |
| Inflation Rate (%) | n/a | 5.5 | 4.6 | 4.1 | 4.1 |
| Current Account (billions USD) | -66.96 | -66.81 | -74.17 | -83.71 | -97.16 |
| Current Account (in % of GDP) | -2.0 | -1.8 | -1.8 | -1.9 | -2.0 |
Source: IMF – World Economic Outlook Database , October 2021
Country Risk
See the country risk analysis provided by La Coface.
