Despite the slowdown in growth in the first quarter of 2024-25, India's underlying economic conditions remain positive, asserted S&P Global Market Intelligence. The financial information and analytics firm S&P Global Market Intelligence kept India's real GDP growth forecast unchanged at 6.8 per cent for the entire year 2024-25.
India's real GDP grew 6.7 per cent during the April-June quarter -- the first quarter of 2024-25 -- down from 8.2 per cent same quarter last year. The RBI had forecast a 7.1 per cent growth in the April-June 2024 quarter.
Weaker government spending ahead of the Lok Sabha election and a prolonged heatwave impacted economic growth during the quarter. "With private consumption, fixed investment, manufacturing and services all showing solid expansion, underlying momentum remains strong, with our real GDP outlook for FY 2024-25 retained at 6.8 per cent," said S&P Global Market Intelligence.
India's GDP grew by an impressive 8.2 per cent during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.
Many global rating agencies and multilateral organisations have also revised their growth forecasts for India upwards. Going forward, improving agriculture production, moderating inflation, and the social support measures announced in the Budget in July should further support private consumption in India.
"The momentum in corporate profit growth is starting to slow, but with industry capacity expanding and government maintaining its focus on infrastructure investment, overall fixed investment growth should also remain healthy," S&P Global Market Intelligence added.
Financial conditions should also turn more favourable from the second half of the fiscal year.
The RBI's Monetary Policy Committee kept the repo rate unchanged in August for the ninth straight time and is likely to maintain the status quo in the October policy meeting, S&P Global Market Intelligence noted.
However, as inflation continues to moderate and monetary conditions around the world ease, S&P Global Market Intelligence said that the RBI may start cutting the repurchase rate in December 2024.
