S&P Maintains India’s Growth Forecast At 6.8% For FY25

Expecting the Reserve Bank of India to begin rate cutting in its Monetary Policy Committee (MPC) meeting in October, S&P Global Ratings have maintained the growth forecast of the Indian economy at 6.8 per cent for the current financial year (FY25).

Retaining the gross domestic product (GDP) growth forecast for FY25-26 at 6.9 per cent for India, it stated that the solid growth will lead the RBI to focus on keeping inflation within its range. S&P Global Ratings highlighted this in its economic outlook of Asia Pacific.

It stated that the GDP growth witnessed moderation in the first quarter of the current fiscal year due to the impact on urban demand by the high interest rates. The Indian economy grew at 8.2 per cent in the last financial year.

Highlighting that the Centre has committed to fiscal consolidation as outlined by the Union Budget presented in July, it mentioned that the government is keeping the focus of public expenditure on infrastructure. As far as the targets are concerned, the Centre has kept the capex target of Rs 11.11 lakh crore for the current fiscal year.

Stating that the RBI has been keeping an eye on food inflation, it stated that it is going to be difficult to keep the headline inflation at 4 per cent unless there is a lasting decline in the rate of increase in food prices. S&P expects inflation to average 4.5 per cent in FY25.

As far as the MPC meeting is concerned, it is scheduled for 7 to 9 October and the apex bank is expected to change its stance on the rate cut which it kept steady at 6.5 per cent since February 2023. The central bank has been targeting to keep the inflation at 4 per cent.