S&P Global Ratings' India Growth Outlook: Insights for FY25 and Beyond

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S&P Global Ratings' India Growth Outlook: Insights for FY25 and Beyond

Team Finance Saathi

25/Jun/2024

Key Points:

S&P Global Ratings forecasts India's GDP growth at 6.8% for FY25, with factors like high interest rates and fiscal policies influencing non-agricultural sectors.
The RBI anticipates a growth rate of 7.2% for FY25, contrasting with S&P's slightly more conservative projection.
Expectations include a gradual reduction in RBI's policy rates over the next few years, aimed at stimulating economic activity amid inflation concerns.

S&P Global Ratings has maintained a cautiously optimistic view on India's economic growth trajectory for the fiscal year 2025, projecting a GDP growth rate of 6.8%. This forecast reflects the agency's assessment of prevailing economic conditions, including the impact of high interest rates and restrained fiscal measures on demand across non-agricultural sectors. Despite these challenges, S&P's outlook underscores India's resilience amid global economic shifts.

In contrast, the Reserve Bank of India (RBI) has revised its growth forecast upward to 7.2% for FY25, citing robust economic indicators and positive surprises in recent performance metrics. This divergence in projections highlights varying perspectives on the pace and sustainability of India's economic recovery post-pandemic.

Looking ahead, S&P envisions a moderated growth trajectory with projections of 6.9% and 7% for FY26 and FY27, respectively. These estimates factor in potential adjustments in monetary policies, with S&P anticipating a gradual reduction in RBI's policy rates to 6% in FY25, followed by further cuts to 5.5% and 5.25% in the subsequent fiscal years. These measures are aimed at balancing economic stimulation while managing inflation within targeted levels.

Regarding inflation, both S&P and RBI align on expectations, forecasting retail inflation to stabilize around 4.5% in FY25. This convergence indicates a consensus on inflation management strategies amidst evolving global and domestic economic landscapes.

Overall, S&P's insights provide a comprehensive understanding of the factors influencing India's economic outlook, offering stakeholders valuable perspectives on growth expectations, monetary policies, and inflation dynamics. As India navigates through economic uncertainties, these projections serve as critical benchmarks for policymakers, businesses, and investors alike, shaping strategic decisions in the years ahead.

This detailed analysis not only clarifies the nuances of S&P Global Ratings' forecasts but also contextualizes them within broader economic trends, making it a must-read for anyone tracking India's economic performance and policy developments.

Also Read : India Sets New Safety Standards for Electric Vehicles: IS 18590: 2024 & IS 18606: 2024 Explained

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S&P Global Ratings' India Growth Outlook: Insights for FY25 and Beyond

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