First Deputy Managing Director of The International Monetary Fund (IMF) Dr Gita Gopinath explained that India’s growth has exceeded the expectations. She said that the IMF expects private consumption to recover and a favorable monsoon to enhance the harvests. She said India is expected to become the third-largest economy by 2027.

Speaking to India Today News Director and Business Today Executive Director Rahul Kanwal, Gopinath was impressed by the growth of India in several factors.     

"India's growth did much better than we expected the last fiscal year and that those carryover effects are affecting our forecast for this year. The other factor is we see private consumption recovering," said Gopinath.

She noted that the improvement of consumption, as well as in rural areas, is a positive sign for India's economic growth. With the new data on FMCG, two-wheeler sales, and a favorable monsoon, the IMF has revised India’s growth prediction for the financial year 2024-25 to 7 percent.

This prediction closely aligns with the Reserve Bank of India's recent projections. In its August Monetary Policy Committee meeting, RBI Governor Shaktikanta Das evaluated a real GDP growth rate of 7.2 percent for 2024-25. The MPC's projections for real GDP growth were 7.1 percent for Q1, 7.2 percent for Q2, 7.3 percent for Q3, and 7.2 percent for Q4.

"Last year, if you looked at private consumption growth, it was around 4 per cent. We expect that to increase, driven by the recovery in rural consumption. We're already seeing that if you look at two-wheeler sales and if you look at, you know, the so-called fast moving consumer good sales. You're seeing that coming back up,” she said.

“The better monsoons that have happened, we expect will generate better harvests. And because of that, with agricultural incomes going up, we should see a recovery in rural consumption. So those are the two factors behind our upgrade," said Gopinath, explaining why the IMF increased India’s growth projection.