Ind-Ra Ups India's GDP Growth Forecast to 7.5% Amid Rising Consumption Demand

India Ratings & Research has revised upwards its GDP growth forecast for the current fiscal year from 7.1% to 7.5%, citing improved consumption demand. The projection is supported by government and private capex, increased agricultural and rural spending, and measures to boost employment and credit delivery to MSMEs.

India Ratings & Research (Ind-Ra) has revised India's GDP growth forecast for the current fiscal to 7.5%, up from the previously projected 7.1%, driven by expectations of improved consumption demand.

The agency highlighted ongoing growth momentum backed by government capital expenditure, deleveraged corporate/bank balance sheets, and an emerging private corporate capex cycle, now further supported by the union government's budget. This budget aims to enhance agricultural and rural expenditure, improve MSME credit delivery, and incentivize job creation.

Ind-Ra anticipates that these measures will broaden consumption demand, projecting GDP growth at 7.5% for FY25, surpassing RBI's 7.2% estimate and the Finance Ministry's 6.5-7%. They also expect Private Final Consumption Expenditure (PFCE) to rise to a three-year high of 7.4% in FY25. Although food inflation poses a risk, anticipated lower retail inflation will buoy real wage growth.

(With inputs from agencies.)