NEW DELHI: Citing the ongoing growth momentum led by government capex, deleveraged balance sheets of corporate quality banks’ assets, and a likely revival in private corporate capex, India Ratings has upped its growth forecast for the current fiscal to 7.5% — the highest among all analysts and 30 bps over the Reserve Bank estimate.
The agency had previously projected 7.1% uptick in the GDP, which has surprisingly grew at 8.2% in FY24. At 7.2%, the Reserve Bank forecast is the highest from the official estimates, which was revised up by 20 bps from its April forecast, while the budget has pegged it at 6.5-7%. Pegging higher growth at 7.5% for this fiscal, the agency in a report Wednesday said the Budget promises to bolster agricultural/rural spending, improve credit delivery to MSMEs and incentivise employment creation in the economy.
Given these, the agency believe these measures would help in broad-basing consumption demand which if not addressed can constrain the ongoing growth momentum. Expecting consumption demand revival, which grew only 4% in FY24, which is not even half the rate of GDP growth, the report expects private final consumption expenditure to grow 7.4% in FY25, up from 4%in FY24.