Crisil predicts India's GDP to grow up to 6.8% in FY25

The Indian economy is set for momentous growth in the upcoming fiscal year 2025, with a Gross Domestic Product (GDP) growth rate of 6.8 percent.

This marks a significant decrease from the 7.6 percent growth seen in 2024.

India's current GDP stands at $3.6 trillion. Experts at Crisil suggest that if this growth trajectory is sustained, there is a good possibility of India attaining upper middle-income status by 2033, with the economy doubling to $7 trillion.

The World Bank Definition states lower-middle-income countries are those countries with per-capita income of $1,000-4,000, and upper-middle-income countries are those countries with per capita income between $4,000-12,000.

What are the economic outlook and challenges ahead?

The upcoming fiscal year is expected to witness moderate economic growth, largely due to the normalization of the net tax impact on GDP, as observed in FY24. However, instability in key trade partner economies may hinder a robust export sector.

The Reserve Bank of India (RBI) has also forecasted GDP growth at 7 percent for 2024-25, while the International Monetary Fund (IMF) predicts a growth rate of 6.7 percent.

What is the RBI's policy?

Crisil also indicates that the rate hikes implemented by RBI's Monetary Policy Committee (MPC) from May 2022 to February 2023, which are still being transmitted, could affect demand in the upcoming fiscal year.

During this period, the RBI increased its primary policy rate, the repo rate, by 250 basis points (bps).

RBI's regulatory actions aimed at monitoring unsecured lending, however, may take a toll on credit growth.

Will inflation ease?

The report also notes that FY24 witnessed easing inflation, primarily due to lower input costs and a slowdown in domestic demand.

Crisil predicts that this easing of inflation will persist into the next fiscal year.

In spite of potential challenges such as geopolitical uncertainties, climate change, fluctuations in the global economy, and technological uncertainties, the agency remains optimistic about India's economic growth in both the near and medium term.