India’s growth forecast for FY2025 remains steady at 6.8%: S&P

Urban consumption, service sector expansion, and infrastructure investments expected to drive resilience

December 9, 2024

GDP growth forecasts for FY2026 and FY2027 have been slightly lowered to 6.7% and 6.8%, respectively, reflecting tempered urban demand

India’s GDP growth for Q2 FY2025 was weaker than expected at 5.4%, prompting agencies to revise future growth estimates

UBS has reduced its FY2025 growth forecast to 6.3%, citing a cyclical recovery in H2 driven by festive demand, rural sentiment, and government spending

The Reserve Bank of India (RBI) will ease monetary policy in 2025 as inflationary pressures decline

India’s economy is set to grow steadily in FY2025, with S&P Global Ratings maintaining its GDP growth forecast at 6.8%, driven by urban consumption, service sector expansion, and infrastructure investments. However, the ratings agency noted challenges such as competitive global manufacturing, weak agriculture growth, and lingering post-pandemic effects on public and household balance sheets.

S&P expects GDP growth for FY2026 and FY2027 at 6.7% and 6.8%, respectively, slightly down from earlier estimates. A lower-than-anticipated Q2 FY2025 GDP growth of 5.4% has led several agencies to revise their forecasts. UBS has adjusted its FY2025 projection to 6.3%, anticipating a cyclical recovery in the second half due to festive demand, improved rural sentiment, and increased government spending.

The Reserve Bank of India (RBI) is forecasted to implement modest monetary easing in 2025 as inflation subsides. S&P economist Vishrut Rana identified enhanced urban infrastructure and improved job quality as potential drivers of labour force participation, which could further bolster growth.

State Bank of India (SBI) remains cautious, predicting FY2025 growth between 6–6.5%, citing sluggish state and central expenditure. Similarly, Elara Securities has lowered its FY2025 forecast by 30 basis points to 6.5%, attributing it to subdued demand and potential undershooting of capital expenditure targets.

Despite challenges, the Department of Economic Affairs has highlighted positive high-frequency data from October, suggesting a potential rebound in the coming quarters as measures to revive growth are implemented.

Source: Business Standard

Recent Articles

UK-India FTA set to boost small businesses, ease market access

May 26, 2025

The UK’s new Free Trade Agreement (FTA) with India will …

Read More

Fitch revises India’s growth potential upward, lowers China’s forecast

May 23, 2025

Fitch Ratings has revised India’s medium-term growth potential upward to …

Read More

Modi calls Northeast India’s growth frontrunner at development summit

May 22, 2025

Prime Minister Narendra Modi hailed the Northeast as a vital …

Read More