NEW DELHI : S&P Global Ratings on Tuesday increased India’s FY25 GDP forecast by 0.4% to 6.8%. However, it said a reduced fiscal deficit could potentially weaken the economic growth.
The Reserve Bank of India had projected a GDP growth of 7% for FY25. S&P Global in its report said it expects the growth in FY25 to moderate from the better than expected 7.6% growth in FY2024. The report mentioned that elevated interest rates may impact demand in the upcoming fiscal year and the regulatory mechanisms to control unsecured lending could impact credit expansion. The agency said that it expects loan growth to decline to 14% in FY25 from 16% in FY24, reflecting the cumulative impact of all these actions.
“For Asian emerging market (EM) economies, we generally project robust growth, with India, Indonesia, the Philippines and Vietnam in the lead. Restrictive interest rates are likely to weigh on demand next fiscal year while regulatory actions to tame unsecured lending will affect credit growth. A lower fiscal deficit will also dampen growth,” the rating agency said in its Economic Outlook Asia-Pacific report.
As per the report, stricter norms may disrupt affected entities and increase caution among fintechs and other regulated entities.