S&P Global Ratings on Monday maintained its forecast for India’s economic growth in the current fiscal year (FY25) at 6.8 per cent, citing potential headwinds from rising interest rates and a reduced fiscal stimulus.

The rating agency acknowledged India’s outperformance, revising upward its FY24 growth estimate to 8.2 per cent. However, it cautioned of moderation in FY25 due to tighter monetary policy and lower government spending, particularly impacting non-agricultural sectors.

S&P’s projections for FY25 are more conservative compared with the RBI’s revised forecast of 7.2 per cent. The central bank’s optimism stems from anticipated improvements in rural demand and contained inflation.

S&P also sees India’s economic trajectory on a gradual upward slope, projecting growth of 6.9 per cent and 7.0 per cent for FY26 and FY27, respectively.

S&P’s assessment aligns with some institutions such as Morgan Stanley (6.8 per cent for FY25) but falls short of estimates from others. Fitch Ratings and the Asian Development Bank predict a 7.2 per cent and 7.0 per cent growth for India in FY25, respectively.

Moody’s Ratings and Deloitte India share a more cautious view, expecting a 6.6 per cent growth this fiscal.

S&P revised China’s 2024 GDP growth forecast upwards to 4.8 per cent from 4.6 per cent but warned of a potential slowdown in the June quarter.

The rating agency cited a combination of subdued consumer spending and robust manufacturing investment as factors that could put pressure on prices and profit margins.

Moody’s view

Moody’s Analytics has highlighted the narrowing gap between India’s current GDP and pre-pandemic trends.

The analytics firm had earlier emphasised that the government’s ability to address key challenges such as inflation, unemployment, and social disparities would be crucial in shaping the economic course over the next five years.