Indian economy looks promising this year FY25 as per the growth projections of the major rating houses and banks. While the initial months of the year were a bit sluggish due to Lok Sabha elections and extreme weather conditions, however, now, the economy is back on the right track and making significant moves upward. Recently S&P, Moody’s, and ADB have come up with their India gdp growth rate projection for FY25. Let us see what these reports have to say about the Indian economy.
Moody’s Projection
For the calendar year 2024, Moody has upgraded the India growth forecast to 7.1%. Earlier in June, the ratings major projected the economy to grow at around 6.8%. However, with the robust growth in the Asia-Pacific region, India is expected is grow further as per recent projections of the rating house. On the other hand, it kept the projection for CY25 unchanged and it still projected at 6.5% like earlier June’s prediction.
Moody’s cited the healthy domestic demand in the economy as one of the major factors for the economic boom. Apart from the domestic demand, the growth in investments and surge in service activities are taking the economy to a new level. It expects the economic growth of the country to exceed in FY25 compared to FY24.
ADB’s Projections
Asian Development Bank (ADB) retained its projections for the economic growth of India. It expects the country to grow at a 7% gdp growth rate for the current fiscal FY25. It also projected that the exports will be higher in this fiscal compared to the earlier projections however; services will mainly pull the export figures while merchandise export may slow down and remain muted in the upcoming fiscal.
As per ADB, the primary reasons behind the stable growth of the economy include higher government spending which is making investments surge and thus increasing the GDP growth and farm output or agriculture to give a solid boost to the economy as it is expected to accelerate in the upcoming quarters of this fiscal.
Apart from agriculture and government spending, private consumption can also improve as indicated by ADB. The private consumption will be mainly driven by the rural regions, which will again be fueled by strong growth in the agricultural sector. On the other hand, the urban economy is already robust due to higher urban consumption.
While ADB indicates increasing private investment in this fiscal, it also projected that the public capital expenditure may slow down in FY25.
Another fact that ADB pointed out is the recent announcement by the government to offer employment-linked incentives. Both the workers and the firms will be benefitted and this can help in boosting the job creation in the country.
S&P Projections
S&P Global Ratings also held on to its earlier 6.8% gdp growth forecast for India for FY25 and FY26, it projected the growth to be 6.9%. S&P also indicated that the higher rural consumption to drive the economy this fiscal while urban consumption to be a little slower, owing to the higher interest rates. Talking about the interest rate, S&P said that it expects RBI to cut 25 basis points twice in this fiscal and the cuts may start as soon as in October.
While S&P remains firm with India’s economic projections, for China, the global ratings major slashed the China gdp growth rate to 4.6% from an earlier projection of 4.8%, as the domestic demand seems weak in China. The major reason behind the slowing down of the Chinese economy as per S&P is the rigidity of the Chinese policymakers who are refraining from changing the macroeconomic policies.
World Bank Projections
In September 2024, the World Bank also revised the gdp growth rate projections for the current fiscal. Earlier, the World Bank projected the growth rate to be around 6.6% while now it has revised the same to 7% and cited similar reasons as Moody’s, ADB, and S&P which are better monsoon, higher agricultural output, increase in government spending, increase in private consumption, and household investment in the realty sector.
Wrapping up
Therefore, the overall outlook for the Indian economy is stable as depicted by all these projections from the major financial and ratings organizations. A positive economic outlook always helps in attracting new investments and keeping the momentum going in the market.
Source: Mint, TheIndianExpress
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