On Tuesday, S&P Global Ratings stated that the Indian economy is poised for "resilient growth" in 2025 and expects inflationary pressures to ease, leading to a "modest" reduction in monetary policy by the RBI.
Representational image. File image
In its outlook for India in 2025, S&P maintained its growth forecast for the current fiscal year at 6.8%, with a projected growth of 6.9% in 2025-26.
“The Indian economy is set for resilient growth in 2025 on the back of strong urban consumption, steady service sector growth and ongoing investment in infrastructure,” Vishrut Rana, Economist at S&P Global Ratings, said.
Rana stated that the central bank is likely to implement a modest easing of monetary policy in 2025 as inflationary pressures diminish.
Last week, the RBI held the benchmark interest rates at 6.5 percent to manage inflation, while reducing the cash reserve ratio (CRR) by 50 basis points to increase liquidity in the system.
India’s economy grew by 8.2 percent in 2023-24.
However, the GDP growth for Q2 (June-September 2024) was weaker than anticipated, at 5.4 percent.
The fiscal impulse slowed, and sectors such as the urban middle class remained weak. Manufacturing growth, in particular, poses downside risks to the forecasted 6.8 percent growth for fiscal 2025.
The economy faces several challenges, including post-pandemic weaknesses in the public sector and household balance sheets, intense global competition in manufacturing, and slow growth in the agricultural sector.
Rana emphasized that creating sufficient jobs for India’s growing labor force, further developing infrastructure and technology, and strengthening both public and household balance sheets could help sustain economic growth.
Comments