Indian economy set for ‘resilient growth’ in 2025, projected inflation pressure to recede: S&P

11 Dec 2024 Evaluate

S&P Global Ratings in its India outlook for 2025 has said the Indian economy is set for ‘resilient growth’ in 2025 and projected inflation pressure to recede which will lead to ‘modest’ easing of the monetary policy by the RBI. S&P also retained India's growth forecast for current fiscal at 6.8 per cent, followed by 6.9 per cent growth in 2025-26. It said ‘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’.

The agency said ‘we expect the central bank to ease monetary policy modestly during 2025 as inflationary pressures recede’. Last week, RBI retained benchmark interest rates at 6.5 per cent to control inflation but cut the cash reserve ratio (CRR) by 50 basis points to infuse liquidity into the system. India's economy grew 8.2 per cent in 2023-24. It said the GDP growth print for fiscal Q2 (June-September 2024) was weaker than expected at 5.4 per cent.

It said the fiscal impulse was slower, and pockets of weakness such as the urban middle class held back. Manufacturing growth which puts some downside risk to its forecast of 6.8 per cent growth for fiscal 2025. There are various challenges for the economy, including post-pandemic weakness in the public sector and household balance sheets, a highly competitive global manufacturing environment and weak agriculture sector growth. It noted creating enough jobs for India's higher labour force participation, further infrastructure and technology improvement, and stronger public and household balance sheets can support economic growth.