India's GDP Growth Projection Nears 6.5-7% for FY25: Insights from Crisil
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New Delhi, Dec 16 (NationPress) The key macroeconomic indicators continue to be strong, and India's GDP growth is anticipated to align closer to the trend growth of 6.5-7% this fiscal year, according to a report from Crisil Insights released on Monday.
The trend GDP growth reflects the average sustainable economic growth rate over time.
Private consumption in the country has performed better than the previous year during the first half of the current fiscal year (FY25).
As noted in the report, investment growth has slowed down compared to last year; however, its contribution to GDP remains elevated in comparison to the decade before the pandemic.
Technical factors led to a growth rate exceeding the trend last year. These factors are expected to exert a moderating influence on GDP growth as they normalize this fiscal year.
The report highlights that GDP growth averaged 6.6% in the decade prior to the pandemic, and this fiscal year is projected to see GDP growth approach the trend range of 6.5-7%.
It is important to emphasize that the primary macro drivers of growth are still robust. In the first half of this fiscal year, private consumption grew by 6.7% on average, compared to 4.1% in the same period of the previous year. Its share of GDP stands at 56.3% this fiscal, surpassing the 56.1% recorded during the pre-pandemic decade.
The Wholesale Price Index (WPI) inflation is also showing signs of normalization. Last fiscal year witnessed a decline in WPI inflation to -0.7%. This fiscal year, WPI inflation has averaged 2.7%, which is closer to the pre-pandemic five-year average of 3.2%.
In November, India’s annual WPI inflation rate decreased to 1.89%, down from 2.36% in October, with the increase in food prices slowing down as fresh crops entered the market.
The Crisil report states, “We anticipate that improving consumption demand will propel growth this fiscal year. Specifically, agriculture and rural demand are expected to rise following a favorable monsoon. This indicates that growth will be more balanced this fiscal year, even if it is lower than last year.”
