In brief

The ruling coalition led by the Bharatiya Janata Party (BJP) will return to power for a third five-year term after the general election in April-May 2024, ensuring policy continuity; this will boost investor confidence. Risks to political stability are negligible owing to a weak opposition and the high domestic approval rating of the prime minister, Narendra Modi, who will remain India's dominant political figure. India's GDP growth will remain one of the strongest in Asia; we expect it to reach 6.5% in fiscal year 2024/25 (April-March). Elevated public spending, robust urban demand, significant foreign investment inflows and easing inflation will support growth. Tensions with China will persist, but a large-scale military conflict is unlikely. India will strive to balance its strategic ties with Russia while seeking closer co-operation over time with fellow members of the Quad (an informal diplomatic grouping that also includes the US, Japan and Australia). India will try gradually to influence global policy by positioning itself as a leader of emerging economies, using its strong bilateral relations and growing market size.

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