On Tuesday, S&P Global Ratings reaffirmed India’s growth prediction of 6.8 percent for the fiscal year 2024-25, demonstrating the stability and resilience of the Indian economy. In contrast, China’s economic growth forecast was adjusted downward by 0.2 percent to 4.6 percent in the calendar year 2024.
In its quarterly economic outlook for the Asia-Pacific region, the global rating agency said, “In India, GDP growth moderated in the June quarter as high interest rates temper urban demand, in line with our projection of 6.8 for GDP for the full fiscal year 2024-2025.”
India’s robust growth trajectory provides the Reserve Bank of India (RBI) with the opportunity to concentrate on aligning inflation with its target, a positive development for the country’s economic outlook.
The rating agency also retained India’s growth forecast for FY 2025-26 at 6.9 per cent. Meanwhile, S&P further reduced China’s GDP growth to 4.3 per cent in the calendar year 2025.
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The July budget reaffirmed the government’s unwavering commitment to fiscal consolidation and its dedication to directing public expenditure towards infrastructure, providing a sense of stability and reassurance.
In Budget 2024-25, Finance Minister Nirmala Sitharaman allocated Rs 11.11 lakh crore for capital expenditure. The central government also set a target of bringing down the fiscal deficit below 4.5 percent of GDP by FY 2025-26.
India will see a first-rate cut in October as Inflation is within RBI’s target.
The report states, “The RBI considers food inflation a hurdle for rate cuts. It reckons that unless there is a lasting and meaningful decline in the rate at which food prices are increasing, it will be tough to maintain headline inflation at 4 percent. Our outlook remains unchanged: we expect the RBI to begin cutting rates in October at the earliest and have penciled in two rate cuts this fiscal year (year ending March 2025).”
S&P reduced China’s GDP growth forecast for 2024 to 4.6 percent from 4.8 percent. This reduction reflects the country’s sluggish property sector, weak domestic demand generally, and policymakers’ reluctance to ease fiscal policy.
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–IANS
