Washington - The International Monetary Fund (IMF) has raised India’s GDP growth projection for FY24 by 40 basis points (bps) to 6.7%, and for FY25 by 20 bps to 6.5%, in its latest ‘World Economic Outlook’ report, citing “resilient domestic demand”.

At 6.7% India would remain the fastest growing major economy in the world. However, the forecast for FY24 is still 60 bps lower than the National Statistical Office’s (NSO) projection. Earlier this month, the NSO projected India’s economy to grow at 7.3% in the current fiscal, based on data extrapolated for the first seven to eight months.

The IMF’s estimate is also 30 bps lower than the RBI’s estimate of 7.0% for FY24. On the Fund’s projection, the finance ministry said the IMF has revised India’s growth forecast for FY24 to 6.7% from 6.3% on account of the robust Q2 GDP outturn. In Q2 FY24, India’s GDP growth came in at 7.6%, much higher than market expectations.

“The IMF has revised upward medium-term (potential) GDP growth to 6.5% (from 6.3%) reflecting strong public investment, positive labor market outcomes in the latest PLFS report, and adjustments to our model,” the Finance Ministry said.

Meanwhile, the IMF expects the global economy to now grow at 3.1% in 2023, 20 bps higher than its previous forecast on the back of declining inflationary pressures. It however says that the pace of expansion remains slow, and “turbulence” may lie ahead.