India set for resilient growth in FY25 driven by urban consumption: S&P Global Ratings
- IBEF
- December 11, 2024
S&P Global Ratings has maintained its GDP growth forecast for India at 6.8% for FY25, highlighting resilient growth driven by strong urban consumption, steady services sector performance, and ongoing infrastructure investments. However, the agency cautioned that slower fiscal impulse is tempering urban demand. S&P expects India's GDP growth to moderate slightly to 6.7% in 2025-26 and 6.8% in 2026-27, down 20 basis points from previous projections. The weaker-than-expected 5.4% growth in Q2 FY25 was a contributing factor. Despite this, S&P remains optimistic, citing improvements in labour force participation, infrastructure, technology, and robust public and household balance sheets as key growth drivers.
In contrast, several agencies have downgraded their growth forecasts. UBS has revised India's GDP growth for FY25 to 6.3%, down from 6.7%, expecting a cyclical recovery in H2 due to festival demand and improved rural sentiment. The State Bank of India (SBI) predicts growth between 6% and 6.5%, citing sluggish government expenditure. In comparison, Elara Securities has lowered its FY25 forecast by 30 basis points to 6.5%, reflecting concerns over a lack of significant demand recovery in H2 and potential capital expenditure shortfalls. Despite these challenges, S&P anticipates a modest monetary policy easing by the Reserve Bank of India (RBI) as inflationary pressures subside.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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