Fitch, CareEdge lower India’s GDP growth projection for FY25

New Delhi: Rating agencies Fitch and CareEdge on Friday revised downward their forecast for India’s economic growth in the current financial year to 6.4 per cent and 6.5 per cent, respectively, from their earlier projection of 7per cent, following weaker than expected expansion recorded in the first half of the fiscal.

Addressing a media briefing, Rajani Sinha, Chief Economist at CareEdge Ratings, said India’s GDP is projected to grow at 6.8 per cent in the second half of the current financial year (FY25).

In the first half of FY25, the country’s gross domestic product (GDP) growth stood at 6 per cent, which was sharply lower than the expectations of the government and multilateral institutions including the World Bank, International Monetary Fund (IMF) and the Asian Development Bank (ADB).

Sinha said a 6.8 per cent expansion in the second half of the financial year would take the full year average to 6.5 per cent.

“Contraction in public capex, prolonged monsoon and weakening urban demand impacted growth momentum in the first half of the current financial year,” she said.

“But we can expect economic growth in the second half to rebound, supported by the recovery in consumption and a pick-up in government capex. Healthy agriculture production and robust services sector performance will be supportive of a rebound in GDP,” she added.

Meanwhile, global ratings agency Fitch has cut its India GDP growth forecast for FY25 to 6.4 per cent from 7 per cent.

For the next financial year (FY25), Fitch Ratings has pegged India’s GDP growth at 6.5 per cent, while CareEdge Ratings expect it to be slightly higher at 6.7 per cent.

“Fitch forecasts India's GDP to expand by 6.4 per cent in FY25 and 6.5 per cent in FY26, slowing from the 8.2 per cent pace in FY24. However, India's economic growth remains strong relative to that of global peers and supports our asset performance forecast,” Fitch Ratings said.

India’s GDP growth slumped to a seven-quarter low of 5.4 per cent in the latest July-September quarter. Following this, several agencies lowered their projections.

Last week the Reserve Bank of India (RBI) cut its projection for the country’s GDP growth in FY25 to 6.6 per cent from 7.2 per cent.

The ADB, on Wednesday, lowered its forecast 6.5 per cent from 7 per cent. State Bank of India, Goldman Sachs and Barclays have also lowered their projections.

“Amid the uncertain global environment, there is a lingering hesitancy among businesses to commit to long-term investments, as the anticipated boost in private capital expenditure is yet to materialise. However, we expect to see improvement in private investment in 2025, supported by anticipated monetary policy easing,” said Sachin Gupta, Chief Rating Officer, CareEdge.