Summary:

S&P Global Ratings has maintained its GDP growth forecast for India at 6.8% for FY25, citing robust urban consumption, stable services, and infrastructure spending. However, weaker fiscal stimulus is constraining urban demand. The forecast for FY26 is 6.7%, and for FY27, 6.8%, which is slightly lower than previous estimates. Despite slower 5.4% growth in Q2 FY25, S&P remains optimistic due to increases in labor force participation and infrastructure.

Several agencies have downgraded their growth forecasts for India. UBS revised its GDP growth forecast for FY25 to 6.3% from 6.7%, citing a cyclical improvement in H2 driven by festival consumption and improving rural sentiment. SBI anticipates growth of 6% to 6.5% due to slower government spending, while Elara Securities lowered its prediction to 6.5%. S&P expects the RBI to ease monetary policy as inflationary pressures subside.

Source: IBEF

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