India likely to grow at 7.5% in FY25: NCAER

India’s growth in the fiscal year 2024-’25, or FY25, is likely to be at a rate of around 7.5 per cent, the economic think-tank National Council of Applied Economic Research (NCAER) said on Wednesday in its monthly economic review for June 2024.

The NCAER projection of growth is higher than that of the Reserve Bank of India (RBI) that recently revised India’s real GDP growth rate for FY25 from 7 per cent to 7.2 per cent. Incidentally, earlier this month, the American credit ratings agency, Fitch Ratings, had also raised India’s FY25 growth forecast to 7.2 per cent from its previous prediction of 7 per cent, as reported by The Squirrels.

“High-frequency indicators reveal that the domestic economy continues to remain resilient,” the NCAER said, adding that GST collections would continue seeing an upsurge and industrial production would continue gaining momentum. India would achieve a growth rate of 7.5 per cent in FY25 owing to robust economic activity in the first quarter of the fiscal year, macroeconomic stability, and an emphasis on growth and investment.

Inflation came down in May to an eight-month low of 4.75, though food price inflation, at more than 8 per cent, continues to be a problem. Industry watchers expect a rate cut of around 25 BPs (basic points) in October with inflation projected to drop further over the coming months.

The activity of India’s private sector, which moderated in May 2024, has in all likelihood gathered pace this month, going by the Purchasing Managers’ Index (PMI) result that was released last week.

The Squirrels reported last week how, according to the HSBC Flash India PMI survey, India’s business activity in the manufacturing and services sectors grew faster in June 2024 compared to May while job creation scaled an 18-year high. The HSBC Flash India Composite Output Index rose to 60.9 in June compared with 60.5 in May 2024.

“Bank credit growth remained above 20 per cent despite some deceleration in personal credit growth, and expectations of ‘above normal’ monsoon despite deficient rainfall in June held out strongly for the farm sector,” the NCAER said in its monthly review.