S&P Global Ratings on Tuesday projected 6.8 per cent growth for the Indian economy in FY25, followed by 6.9 per cent growth in FY26, on the back of strong urban consumption, steady service sector growth and ongoing investment in infrastructure.
The growth projection by S&P Global Ratings is higher than the latest Reserve Bank of India's (RBI) forecast for India's GDP growth for 2024-25 at 6.6 per cent, from 7.2 per cent earlier.
The global credit rating agency also projected 7.0 per cent GDP growth for the Indian economy in FY27, maintaining its positive outlook for the country which remains the fastest-growing economy in the world.
"We expect the central bank to ease monetary policy modestly in 2025 as inflationary pressures abate," economist Vishrut Rana from S&P Global Ratings added.
Resilient Growth
================
The Indian economy will be poised to experience growth in 2025, according to ratings agency S&P Global Ratings. "We currently project 6.8 percent growth for the economy for FY 2024/25 followed by 6.9 percent growth in FY 2025/26," Rana added.
The GDP growth for Q2 (June-September 2024) in FY25 was at 5.4 per cent, which was less than expected.
However, the country has been growing at a fast pace amid the slowing global economy because of prudent fiscal management by the government for macroeconomic stability. The fiscal management has maintained the perfect balance between the fiscal deficit and fiscal support for growth.
India's growth story was intact, according to outgoing RBI Governor Shaktikanta Das, as "going forward, high-frequency indicators available so far suggest that the slowdown in domestic economic activity bottomed out in the second quarter of this year and it has since recovered aided by strong festive demand and pickup in rural activities."
Industrial activity is also expected to normalise and recover from the lows of the previous quarter, said Das.
The ratings agency S&P Global Ratings said higher labour force participation, further infrastructure and technology improvement, and stronger public and household balance sheets can help support economic growth in India.
"Better urban infrastructure and improved quality of jobs can crowd in labour force participation," said Rana.
The central bank, in its recent Monetary Policy Committee (MPC) meeting, announced a cash reserve ratio (CRR) cut of 50 bps which will add over Rs 1.16 lakh crore of liquidity.
Read also| SEBI warns investors against trading in unlisted debt securities
