GDP growth will be close to 7.5 percent in FY25, Ind-Ra revises its forecast
Ind-Ra on Wednesday raised India's GDP growth forecast for the current financial year from 7.1% to 7.5%. Ind-Ra expects private final consumption expenditure (PFCE) to reach a 3-year high of 7.4% in FY25 from 4% in FY23-2024. It has been said that the budget will give impetus to GDP.
India Ratings and Research (Ind-Ra) on Wednesday raised India's GDP growth forecast for the current financial year from 7.1% to 7.5%. This decision has been taken due to the expectation of improvement in consumption demand.
The research said that the ongoing growth momentum due to government capital expenditure, reduction in balance sheets of corporates/banks, and the start of private corporate capital expenditure is now supported by the Union Government's budget. The budget promises to boost agriculture/rural spending, improve credit delivery to MSMEs, and stimulate job creation in the economy.
The rating agency revised its GDP growth forecast for FY25 upwards, saying Ind-Ra believes these measures will help broaden consumption demand. Ind-Ra's growth forecast is higher than the RBI's estimate, which had projected 7.2% growth in FY25, and the Finance Ministry's Economic Survey which estimated GDP expansion between 6.5-7%.
Ind-Ra expects private final consumption expenditure (PFCE) to reach a 3-year high of 7.4% in FY25, up from 4% in FY24. Consumption demand is highly skewed, as it is driven by goods and services consumed largely by higher-income group households.
"However, a better-than-normal monsoon and measures announced in the Union Budget for FY25 are expected to correct this by boosting demand for goods and services consumed by rural and lower-income households," Ind-Ra said.
