Indian economy is set for “resilient growth” in 2025 and projected inflation pressure to recede which will lead to “modest” easing of the monetary policy by the RBI, S&P Global Ratings said on Tuesday.
In its India outlook for 2025, it also retained India’s growth forecast for current fiscal at 6.8 per cent, followed by 6.9 per cent growth in 2025-26. The agency said the GDP growth print for fiscal Q2 (June-September 2024) was weaker than expected at 5.4 per cent.
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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 fiscal impulse was slower, and pockets of weakness such as the urban middle class held back. Manufacturing growth puts some downside risk to our forecast of 6.8 per cent growth for fiscal 2025, it said.
Vishrut Rana, Economist at S&P Global Ratings, said, “The Indian economy is set for resilient growth in 2025 on the back of strong urban consumption, steady service sector growth and ongoing investment in infrastructure.” We expect the central bank to ease monetary policy modestly during 2025 as inflationary pressures recede, he added.
Notably, during the last week MPC, RBI retained benchmark interest rates at 6.5 per cent to control inflation but cut the cash reserve ratio (CRR) by 50 basis points to infuse liquidity into the system.
Outgoing RBI Governor Shaktikanta Das had said, India’s growth story was intact 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.”
S&P Global Ratings said that higher labour force participation, further infrastructure and technology improvement, and stronger public and household balance sheets can support economic growth in India.
