India Ratings Forecasts Moderation in GDP Growth to 6.5% for FY25

India Ratings and Research projects a moderation in India’s GDP growth to 6.5% for the financial year 2024-25, slightly lower than the Reserve Bank of India’s estimate of 7%. Despite the base effect, the agency notes positive indicators for economic recovery including sustained government capital expenditure, healthy corporate performance, and softness in global commodity prices.

GDP Growth Forecast

• India Ratings predicts GDP growth to moderate to 6.5% in FY25, slightly below RBI’s estimate.
• Cites sustained government capital expenditure, healthy corporate performance, and global commodity price trends as factors contributing to economic recovery.

Inflation Projection

• Headline retail inflation forecasted at 4.8%, 30 basis points higher than RBI’s projection of 4.5%.
• Discrepancy noted particularly in the third quarter with India Ratings forecasting 5.5%.

Consumption Outlook

• Private final consumption expenditure expected to grow by 6.1% in FY25, up from 4.4% in FY24.
• Caution expressed regarding skewed consumption trend favoring upper-income households, highlighting the need for broader-based consumption growth.