Deutsche Bank expects 6.9% expansion in India's real GDP in FY25

The Indian economy has exhibited ‘remarkable resilience’ despite higher rates for longer, the Russia-Ukraine war and the pandemic. A strong pick-up in real GDP growth during FY24 can be also attributed materially to a very low GDP deflator, it noted.

Analysts there said New Delhi’s commitments on fiscal deficit to 5.1 per cent in fiscal 2024-25 (FY25) and further down to 4.5 per cent in FY26 ‘look more credible now’. The figure was 5.6 per cent in FY24 against the budgeted 5.8 per cent.

“A faster-than-anticipated pace of fiscal consolidation could pave the way for a sooner-rather-than-later sovereign rating upgrade for India,” the analysts said in a note.

Courtesy the higher than expected dividend announcement by the Reserve Bank of India (RBI) at Rs 2.1 lakh crore, the fiscal deficit for FY25 can come down to 5 per cent as against the budgeted 5.1 per cent.

As a cautionary note, Deutsche Bank pointed out that while the real GDP grew by 8.2 per cent, real gross value added growth was 1 percentage point lower at 7.2 per cent.

ALCHEMPro News Desk (DS)