S&P Ratings on Monday raised India’s growth forecast for this fiscal to 6.4 per cent from 6 per cent but lowered it for the next fiscal as it expects growth to slow on a higher base impact and subdued global growth.

“We have revised upwards our projection for this fiscal as robust domestic momentum seems to have offset headwinds from high food inflation and weak exports,” S&P Global Ratings chief economist for Asia-Pacific Louis Kuijs said in a research note on the outlook for the region.

The rating agency has lowered its outlook for growth in 2024-25 to 6.4 per cent from 6.9 per cent.

This projection is in line with many agencies, though lower than the government and RBI projection of 6.5 per cent for the fiscal.

The IMF, World Bank, ADB and Fitch expect GDP to expand 6.3 per cent in the current fiscal.

The Indian economy grew 7.2 per cent in the 2022-23 fiscal and 7.8 per cent in the April-June quarter.

The second quarter GDP data will be released later this week, but economists estimate growth to have moderated sequentially to 7 per cent in the quarter ending September from 7.8 per cent in the quarter ending June.

Japanese brokerage Nomura said: “We expect quarterly GDP growth to rise to 7.1 per from 7.8 per cent, driven by continued momentum in investment growth, a smaller drag from net exports and moderating but still robust consumption growth.”

“A normalising base and an erratic monsoon are expected to result in a sequential moderation in the GDP growth to 7 per cent in the
second quarter of the fiscal from 7.8 per cent in the first quarter.

“Regardless, we anticipate that the GDP expansion in this quarter will exceed the RBI’s monetary policy committee’s October 2023 projection of 6.5 per cent,” Aditi Nayar, chief economist, Icra, said.

On inflation, S&P said the surge during the second quarter is unlikely to have an impact on overall inflation.

“In India, there was a transitory spike in food inflation in the July-September quarter, of the fiscal year but it appears to have had little effect on underlying inflation dynamics,” Kuijis said.

“Still, headline inflation remains above the Reserve Bank of India’s (RBI) target of 4 per cent, suggesting it will be a while before the rate cycle turns.”

In its Economic Outlook for Asia Pacific, S&P said growth this year and the next is on track to be the strongest in emerging market economies with solid domestic demand — India, Indonesia, Malaysia and the Philippines.

Fixed investment has recovered considerably more than private consumer spending in India, it said.