Economy likely to expand by 6.8% in FY25: S&P

The Indian economy is expected to grow by 6.8% in 2024-25 and 6.9% in 2025-26, according to India Outlook by S&P Global Ratings.

The economy is poised for robust growth in 2025, supported by strong urban consumption, steady growth in the service sector, and ongoing investment in infrastructure, the rating agency said on Tuesday.

In the second quarter of the current financial year, the gross domestic product (GDP) grew by 5.4%, marking a seven-quarter low, due to weak manufacturing and sluggish demand, according to the official data released last month. Manufacturing growth was recorded at 2.2%, down from 7% in the first quarter.


In the monetary policy meeting last week, the RBI revised its growth estimate for 2024-25 to 6.6% from 7.2% earlier. It also kept the policy rate unchanged at 6.5% for the eleventh consecutive time. "The fiscal impulse was slower, and pockets of weakness such as the urban middle class held back," said Vishrut Rana, Economist, S&P Global Ratings. He cautioned that manufacturing growth could pose some downside risk to the agency's forecast for 2024-25. S&P Global Ratings anticipates RBI to ease monetary policy modestly during 2025 as inflationary pressures recede. It expects a policy rate of 6% in 2024-25 and 5.5% in 2025-26.

Inflation rate will decline to 4.5% in 2024-25 from 5.4% in the year before, the agency said. It will rise to 4.6% in 2025-26.