India’s GDP Growth Projected to Reach 6.7% in FY25

India’s GDP growth is projected to improve to 6.7% in the fiscal year 2025 (FY25), according to a CRISIL Intelligence report. This anticipated growth follows a moderation to 6.4% in the current fiscal year, down from 8.2% in the previous year.

Inflation Trends and Monetary Policy

The report highlights a sustained decline in food inflation, with the Consumer Price Index (CPI) inflation cooling to 5.2% in December from 5.5% in November. Food inflation eased to 8.4% from 9%, while non-food inflation remained stable at 3.1%. This trend is expected to create room for a rate cut by the Reserve Bank of India (RBI) in the coming months.

Industrial Production and Investment

The Index of Industrial Production (IIP) rose to 5.2% in November, up from 3.7% in October, driven by strong performance in investment goods and consumer durables, aided by a low base effect. CRISIL’s analysis indicates that industrial capital expenditure (capex) will rise to ₹6.5 lakh crore annually on average between fiscals 2024 and 2028, up from ₹3.9 lakh crore in the preceding five fiscals.

Agricultural Outlook and Rural Consumption

Higher reservoir levels are expected to boost rabi crop output, enhancing farm incomes and rural consumption. Increased agricultural production is also likely to alleviate pressure on food inflation during the remainder of the current fiscal, potentially enhancing discretionary consumption.

Global Risks and Economic Outlook

Despite the positive outlook, the Indian government’s recent report maintains a growth forecast of 6.5% to 7% for the current fiscal year, down from 8.2% the previous year, citing heightened geopolitical risks. The report warns that geopolitical conflicts and uncertainties in major economies’ trade policies pose significant risks to India’s economic growth.

Summary of the news

Key Points	Details
Why in News	CRISIL projected India’s GDP growth at 6.7% for FY25, up from 6.4% in FY24.
Drivers of Growth	– Cooling inflation (CPI inflation expected at 5.2%).
	– Industrial capital expenditure projected at ₹6.5 lakh crore annually (FY24-FY28).
	– Higher rabi crop output boosting rural incomes and consumption.
Current GDP Growth Rate	Estimated at 6.4% for FY24.
Previous GDP Growth Rate	Stood at 8.2% in FY23.
Inflation Trends	CPI inflation expected to decline further, with food inflation easing from 9% to 8.4%.
Industrial Production	IIP growth at 5.2% in November, boosted by investment goods and consumer durables.
Global Risks	Geopolitical tensions and trade policy uncertainties flagged as challenges to growth.
Static Information	– CRISIL: Indian credit rating agency established in 1987.
	– Headquarters: Mumbai, India.
	– Parent Company: S&P Global.