Report Predicts 6.8% GDP Growth and Easing Inflation in Second Half of 2024-25
India’s industrial activity is projected to pick up pace in the second half of 2024-25, driven by recovering consumption demand and a boost in export growth, according to a new report from CRISIL. The report, released on Friday, also forecasts inflation to ease during this period, offering some relief to consumers and businesses alike.
India’s industrial activity is projected to pick up pace in the second half of 2024-25, driven by recovering consumption demand and a boost in export growth, according to a new report from CRISIL. The report, released on Friday, also forecasts inflation to ease during this period, offering some relief to consumers and businesses alike.
The report highlights that while high food inflation, elevated interest rates, and slowing credit growth have weighed on consumption recovery, there are signs of improvement. “Food inflation is showing signs of easing, which is expected to open up space for discretionary consumption,” the report states. Furthermore, a healthy agricultural output is expected to enhance the rural economy, contributing to a more balanced recovery.
However, challenges remain, particularly for the urban economy. The report notes that urban growth is facing diminished support from credit growth, exacerbated by high interest rates. Additionally, a lower fiscal stimulus from the government is expected to moderate GDP growth. While government capital expenditure (capex) is projected to revive in the second half of the fiscal year, the overall growth rate is expected to moderate compared to the previous fiscal year.
A key area of focus is private investment. The CRISIL report emphasizes that reviving private investment is crucial to maintaining investment momentum and sustaining overall growth. Global trade is also expected to support export growth, though geopolitical tensions, such as the potential US-China tariff dispute, could pose risks to trade flows and supply chain stability.
The report projects India’s GDP growth for 2024-25 at 6.8%, down from 8.2% in the previous fiscal year. Despite this slowdown, the report emphasizes that growth remains robust, with risks tilted to the downside.
Inflation, which has been a major concern in recent months, is expected to soften in the coming months, driven primarily by food price reductions. The onset of the kharif crop is expected to ease vegetable prices, while a high base from last year will also help bring down inflation. However, edible oil prices will need to be monitored, as they continue to pose inflationary pressure.
Non-food inflation is also expected to remain subdued due to weak domestic demand and soft global prices. Overall, the report forecasts that inflation will average around 4.6% for the fiscal year, though there is a possibility of some upward pressure due to vegetable and edible oil prices. A policy rate cut is anticipated in February to further support economic recovery.
In conclusion, CRISIL’s report suggests a mixed economic outlook for India in the second half of 2024-25, with accelerating industrial activity, easing inflation, and moderating GDP growth. The pace of recovery will depend largely on the revival of private investment and the resolution of global trade tensions.
Sources By Agencies
About The Author
