S&P Global Ratings has maintained India’s growth forecast at 6.8 per cent for the current fiscal year and predicts that the RBI will begin cutting interest rates in October. The agency also retained its GDP growth forecast for the 2025-2026 fiscal at 6.9 per cent, citing India’s solid growth.
Despite a moderation in GDP growth in the June quarter, S&P expects the economy to grow at 6.8 per cent for the full fiscal year 2024-2025. The agency noted that high interest rates have tempered urban demand, leading to the slowdown from the 8.2 per cent growth in the last fiscal.
S&P highlighted the government’s commitment to fiscal consolidation and infrastructure spending in the Union Budget. The agency believes that food inflation remains a hurdle for rate cuts and expects the RBI to initiate rate cuts in October, with two cuts projected for the fiscal year.
The RBI’s monetary policy committee is set to meet in October, and after the US Federal Reserve’s rate cut, there are expectations for a 25 basis points cut by the RBI. S&P expects inflation to average 4.5 per cent in the current fiscal.