The International Monetary Fund has increased its growth forecast for India for 2023 by 20 basis points to 6.1%. 

This has fuelled forecasts India will be the fastest-growing major economy in the world this year.

Within the July update to its World Economic Outlook, the IMF said the revision was fuelled by stronger growth in Q4 2022, bolstered by domestic investment, CNBC reports.

According to data published at the end of May, India’s GDP growth for the first quarter of this year reached 6.1%, surpassing all expectations and leading the country’s statistics ministry to increase its estimate for growth in 2022-23 by 20 basis points to 7.2%.

However, the IMF isn’t as optimistic about India as the government or the Reserve Bank of India (RBI), which forecasts GDP growth of 6.5% in 2023-24. 

As a result, the IMF’s predictions are more in line with several private sector economists who forecast India’s growth to decelerate to below 6% in 2023 due to weakening global growth prospects as central banks around the world take action to curb soaring inflation.

In addition, a bulletin published by the Reserve Bank of India earlier this month stated that India could become a developed country by 2047, with an average annual real GDP growth of 7.6% over the next 25 years, Mint reports.

Whereas World Bank President Ajay Banga recently stated that domestic consumption provides a cushion to the country’s economy against a global slowdown, as the majority of GDP is reliant on local demand.

The IMF’s 2024 forecast for 6.3% growth in India remained the same as its April forecast.