India Ratings & Research (Ind-Ra) has revised its GDP growth forecast for India for the fiscal year 2025, increasing it to 7.5% from the earlier projection of 7.1%. This revision is driven by expectations of improved consumption demand, supported by ongoing government capital expenditure, deleveraged corporate and bank balance sheets, and an emerging private corporate capex cycle. The measures introduced in the union budget, particularly those aimed at boosting rural and agricultural spending, credit delivery to MSMEs, and employment creation, are anticipated to broaden consumption demand and support overall economic growth.
BulletsIn
- Revised Growth Forecast: Ind-Ra increased India’s FY25 GDP growth forecast to 7.5% from the earlier 7.1%.
- Consumption Demand: The revision is based on expectations of improved consumption demand in the economy.
- Government Capex: Growth momentum is supported by ongoing government capital expenditure.
- Corporate and Bank Health: Deleveraged balance sheets of corporates and banks contribute to economic stability.
- Private Capex Cycle: An emerging private corporate capex cycle is gaining momentum.
- Union Budget Impact: The FY25 union budget is expected to bolster agricultural and rural spending.
- MSME Support: Enhanced credit delivery to MSMEs is anticipated to drive growth.
- Employment Incentives: The budget incentivizes employment creation, aiding in broader economic recovery.
- RBI and Economic Survey Comparison: Ind-Ra’s 7.5% forecast surpasses RBI’s 7.2% and the Finance Ministry’s estimate of 6.5-7%.
- Inflation and Wage Growth: Despite food inflation risks, lower retail inflation in FY25 is expected to support real wage growth.
