Indian Economy Set For 7.1% Growth In FY25, Moody’s Projects

The Indian economy is projected to grow at a robust 7.1% in the fiscal year 2024-25, according to Moody’s Analytics. The country continues to show resilience amid global uncertainties. Moody’s maintained its growth forecast at 6.5% for 2025 and 6.6% for 2026.

Improved Inflation Outlook

Moody’s Analytics also revised India’s inflation forecast down to 4.7% from 5%. The country’s inflation rate stayed below 4% in July and August. For 2025 and 2026, the inflation forecasts remain unchanged at 4.5% and 4.1%, respectively.

In its Asia Pacific outlook, Moody’s increased the 2025 growth forecast for the region to 4% from 3.9%. The report noted that exports have driven regional growth but remain on unstable ground due to soft global demand and decreasing demand for key exports, like chips.

RBI’s Approach to Interest Rates

Earlier, S&P Global Ratings confirmed India’s growth forecast at 6.8% for FY 2024-25. The agency noted a moderation in GDP growth during the June quarter, primarily due to high interest rates affecting urban demand. S&P also retained its forecast for FY 2025-26 at 6.9%.

The report highlighted that the Reserve Bank of India (RBI) views food inflation as a barrier to rate cuts. It expects the RBI to initiate rate cuts as early as October, with two rate cuts anticipated by the end of the fiscal year in March 2025. The year-on-year inflation rate for August stood at 3.65%, the second lowest in five years, while July recorded a rate of 3.54%, falling below the RBI’s target of 4% for the first time.

Also Read: S&P Global Ratings Maintains India’s GDP Growth Forecast At 6.8% for FY25, Cuts China’s Projection