India’s GDP growth to hold steady in FY25, likely to clock 6.7 pc in FY26

India's economic growth will continue to hold steady in FY25 despite global uncertainties, with a projected GDP at 6.7 per cent in FY26, a report showed on Friday.

CareEdge Ratings said that it expects Indian government to continue on the path of fiscal consolidation and projects India's GDP growth to remain healthy at 6.5 per cent in FY25 and 6.7 per cent in FY26.

“We expect to see improvement in private investment in 2025, supported by anticipated monetary policy easing,” said Sachin Gupta, Chief Rating Officer and ED, CareEdge Ratings.

The report said that CPI inflation is expected to moderate in the coming quarters. It expects food inflation to moderate, driven by a strong kharif harvest and favourable conditions for rabi sowing.

The CPI inflation, excluding vegetable inflation, has been below 4 per cent in the last few months. The average CPI inflation is projected at 4.8 per cent in FY25 and 4.5 per cent in FY26.

Core inflation is expected to remain benign, averaging 3.5 per cent in FY25 and 4.3 per cent in FY26. And WPI inflation is anticipated to average 2.5 per cent in FY25 and 3 per cent in FY26.

“We can expect the economic growth in H2 FY25 to rebound, supported by the recovery in consumption and a pick-up in government capex. Healthy agriculture production and robust services sector performance will be supportive of a rebound in GDP,” said Rajani Sinha, Chief Economist, CareEdge Ratings.

As far as government finances are concerned, net revenue collection will be aligned with the budgeted target.

The report expects RBI to cut policy interest rate by 50-75 bps in 2025, as food inflation moderates.

Overall, the report expected India’s current account deficit (CAD) to remain manageable at 0.9 per cent of GDP in FY25.

On the external front, it projected merchandise exports to rise by 2.5 per cent, while, services exports projected to record a strong growth of 13 per cent in FY25.