New Delhi, March 26: S&P Global Ratings raised India’s growth forecast to 6.8%. S&P India predicted real GDP growth to decline to 6.8% in fiscal year 2025 after the National Statistical Office reported above-forecast 7.6% growth in 2024.
This deceleration is due to restrictive interest rates, regulatory initiatives to regulate unsecured lending, and a decreased budget deficit, which will reduce growth.
Consumer inflation is predicted to fall to 4.5% in fiscal 2025, the agency said.
In the first ten months of the current fiscal year, food inflation rose 40 basis points while non-food CPI inflation fell 250 basis points.
Due to high food inflation, headline inflation is expected to fall to 5.5% this fiscal year from 6.7% in 2023.
Higher interest rates and inflation have reduced household purchasing power in domestic demand-led countries like India, Japan, and Australia, lowering sequential GDP growth in the second half of the fiscal year.
India’s sequential growth slowed following a strong first half. Hong Kong, Malaysia, and Thailand showed similar patterns.
Slowing inflation, a reduced budget deficit, and lower U.S. policy rates are preparing the Reserve Bank of India to decrease rates.
S&P Global Ratings thinks that clarification on disinflation might postpone this decision until June 2024 or later.
India’s growth prediction modification comes amid local and global economic uncertainty.
Although the forecast is favorable, officials are actively monitoring several aspects to maintain sustained economic development and stability in the area.
