India's GDP growth to ease to 6.2% in FY25 from 6.6% in FY24: ICRA

As GDP growth is expected to ease to 5.3 per cent in the fourth quarter (Q4) of FY24 from the anticipated 6 per cent in Q3, this translates to a growth of 6.6 per cent in FY24 from 7.2 per cent in FY23.

The latest estimate for FY24 is marginally higher than ICRA’s earlier estimate of 6.5 per cent.

Headwinds owing to the spillover of the ongoing weakness in rural demand in early-FY25, a slowdown in the government’s capital expenditure and construction activity during the first half of the fiscal and a continued weakness in export growth are expected to weigh in on the growth in economic activity in FY2025, ICRA said in a note.

The consumer price index (CPI)-based inflation witnessed a broad-based moderation to 5.4 per cent in Q3 FY24 from 6.4 per cent in Q2, before easing to 5.1 per cent in January this year.

It is expected to soften further to sub-5 per cent each in February and March this year, resulting in an average inflation of 5.3 per cent for FY24. Thereafter, ICRA expects CPI inflation to ease to 4.6 per cent in FY25, assuming a normal monsoon this year.

It foresees a rate cut cycle of 50-75 basis points (bps) to commence in the August 2024 policy meeting, with a stance change in the preceding review, after there is some visibility around the monsoon turnout.

ALCHEMPro News Desk (DS)