S&P ups India growth forecast to 6.8% for FY'25

S&P raises India's growth forecast to 6.8% for next fiscal year, but warns of restrictive interest rates.

S&P Global Ratings on March 26 raised India’s growth forecast for the next financial year to 6.8%, but flagged restrictive interest rates as a dampener for economic growth.

The Indian economy is estimated to have clocked a growth of 7.6% in the current fiscal.

In November, last year, the U.S.-based agency had projected India’s growth to be 6.4% in 2024-25 fiscal on robust domestic momentum.

“For Asian emerging market [EM] economies, we generally project robust growth, with India, Indonesia, the Philippines, and Vietnam in the lead,” S&P said in its Economic Outlook for the Asia Pacific.

In largely domestic demand-led economies such as India, Japan, and Australia, the impact of higher interest rates and inflation on household spending power reduced sequential GDP growth in the second half, S&P said.

“We expect India’s real GDP growth to moderate to 6.8% in fiscal year 2025 [ending March 2025],” S&P said.

Restrictive interest rates are likely to weigh on demand next fiscal year, while regulatory actions to tame unsecured lending will affect credit growth. A lower fiscal deficit will also dampen growth, it added.