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