'Growth rate will be 6.5 percent in the next financial year', claims rating agency Moody's

Rating agency Moody's announced on Wednesday that the country's growth rate will accelerate at a 6.5 percent rate in the next financial year. The Indian economy will grow at a 6.3 percent rate in the current financial year. Higher government capital expenditure, the increase in consumer demand after tax cuts, and the decline in interest rates can drive the growth rate.

Moody's forecast a stable outlook for the banking sector and expressed the view that the operating environment for Indian banks will remain favorable next financial year but after the improvement witnessed during the last few years, their asset quality will decrease marginally and there will be some strain on unsecured consumer loans, microfinance loans, and small and medium enterprise (SME) loans. The banks will be operating in the profit mode as the decline in net interest margin (NIM) will be marginal with minor reductions in interest rates.

Moody's said that after a temporary slowdown in mid-2024, India's economic growth is expected to accelerate again and will be one of the fastest rates among large economies globally. Moody's Ratings said, 'Government capital expenditure, tax cuts for middle-class income groups to boost consumption and monetary easing will keep India's real GDP growth above 6.5 percent in FY 2025-26. It is estimated to be 6.3 percent in the current financial year. '