<p>New Delhi: India’s gross domestic product (GDP) growth is expected to rebound to 6.5 per cent and further to 7 per cent in the third and fourth quarters of the current financial year, respectively, after a sluggish performance of 5.4 per cent in the second quarter, taking the full year average to 6.4 per cent, India Ratings (Ind-Ra) said on Wednesday.</p>.<p>The current financial year’s growth will be sharply lower than the 8.2 per cent expansion recorded in 2023-24, while it is likely to improve only marginally to 6.6 per cent in the fiscal year beginning April 2025.</p>.<p>“Ind-Ra believes the Indian economy is facing monetary, fiscal and external tightening. While it expects monetary conditions to ease now, the fiscal and external tightening is expected to continue in FY26 as well,” Devendra Kumar Pant, Chief Economist, Ind-Ra, told reporters.</p>.<p>He said the GDP growth in the next six quarters is expected to be in the range of 6.3 per cent to 7 per cent. </p>.<p>The rating agency’s projection is lower than the Reserve Bank of India’s estimates. For the October-December quarter (Q3), the RBI has currently pegged the GDP growth at 6.8 per cent. Ind-Ra expects it to be at 6.5 per cent. For January-March (Q4), against the RBI’s estimate of 7.2 per cent, Ind-Ra’s projection is 7 per cent</p>.<p>“The Indian economy has experienced a cyclical growth slowdown in the past three quarters, which it expects to reverse from 3Q FY25,” Pant said.</p>.Q2 GDP growth slowdown a temporary blip: FM Sitharaman.<p>“The GDP growth till FY24 was impacted by the aftereffects of Covid-19 even the base effect impacted the quarterly GDP growth. While the 1Q FY25 GDP growth was impacted by the combination of a strong base effect and the general elections in May 2024, the growth in 2Q FY25 witnessed the extended impact of weak private sector capex,” he said.</p>.<p>Pant said that investments would be a key growth driver of the Indian economy in FY26, like in FY22 and FY24.</p>.<p>The growth in gross fixed capital formation (GFCF), which is a measure of investment, is expected to slow to 6.7 per cent in the current financial year from a high of 9 per cent recorded in FY23. Pant said GFCF growth is expected to accelerate to 7.2 per cent in 2025-26 from 6.7 per cent in the current fiscal.</p>.<p>“The private sector capex is still not broad based and concentrated in a few sectors such as roads, airports, renewable energy etc. Private sector participation in capex is important for sustainable economic growth and may alleviate some pressure on the government deficit,” Pant said. </p>
<p>New Delhi: India’s gross domestic product (GDP) growth is expected to rebound to 6.5 per cent and further to 7 per cent in the third and fourth quarters of the current financial year, respectively, after a sluggish performance of 5.4 per cent in the second quarter, taking the full year average to 6.4 per cent, India Ratings (Ind-Ra) said on Wednesday.</p>.<p>The current financial year’s growth will be sharply lower than the 8.2 per cent expansion recorded in 2023-24, while it is likely to improve only marginally to 6.6 per cent in the fiscal year beginning April 2025.</p>.<p>“Ind-Ra believes the Indian economy is facing monetary, fiscal and external tightening. While it expects monetary conditions to ease now, the fiscal and external tightening is expected to continue in FY26 as well,” Devendra Kumar Pant, Chief Economist, Ind-Ra, told reporters.</p>.<p>He said the GDP growth in the next six quarters is expected to be in the range of 6.3 per cent to 7 per cent. </p>.<p>The rating agency’s projection is lower than the Reserve Bank of India’s estimates. For the October-December quarter (Q3), the RBI has currently pegged the GDP growth at 6.8 per cent. Ind-Ra expects it to be at 6.5 per cent. For January-March (Q4), against the RBI’s estimate of 7.2 per cent, Ind-Ra’s projection is 7 per cent</p>.<p>“The Indian economy has experienced a cyclical growth slowdown in the past three quarters, which it expects to reverse from 3Q FY25,” Pant said.</p>.Q2 GDP growth slowdown a temporary blip: FM Sitharaman.<p>“The GDP growth till FY24 was impacted by the aftereffects of Covid-19 even the base effect impacted the quarterly GDP growth. While the 1Q FY25 GDP growth was impacted by the combination of a strong base effect and the general elections in May 2024, the growth in 2Q FY25 witnessed the extended impact of weak private sector capex,” he said.</p>.<p>Pant said that investments would be a key growth driver of the Indian economy in FY26, like in FY22 and FY24.</p>.<p>The growth in gross fixed capital formation (GFCF), which is a measure of investment, is expected to slow to 6.7 per cent in the current financial year from a high of 9 per cent recorded in FY23. Pant said GFCF growth is expected to accelerate to 7.2 per cent in 2025-26 from 6.7 per cent in the current fiscal.</p>.<p>“The private sector capex is still not broad based and concentrated in a few sectors such as roads, airports, renewable energy etc. Private sector participation in capex is important for sustainable economic growth and may alleviate some pressure on the government deficit,” Pant said. </p>