Economic Growth Will Gain Pace In H2FY25

The prospects for the Indian economy look bright for the coming year and we can expect growth to cross the 7% mark on top of 6.6-6.8% expected for FY25 - Madan Sabnavis, Chief Economist, Bank of Baroda

New Delhi: India will have to navigate geopolitical headwinds, tame domestic inflation and nudge the private sector to further loosen their purse strings as the world’s fastest-growing major economy seeks more purple patches in 2025, leaving behind September quarter growth blues.

Economists at the Reserve Bank of India (RBI) say that high-frequency indicators for the third quarter of 2024-25 indicate the economy is recovering, driven by strong festival activity and a sustained upswing in rural demand. In what has been described as a ‘temporary blip’ by Union Finance Minister Nirmala Sitharaman, the country’s economic growth slid to a seven-quarter low of 5.4 per cent in the July-September period after clipping a healthy rate of 7-8 per cent.

With the growth versus inflation debate leaving the finance ministry and RBI on different pages, all eyes will also be on possible interest rate cuts in February when the central bank’s monetary policy panel meets for the first time under the new Governor Sanjay Malhotra.

The panel meeting will come close on the heels of the 2025-26 Union Budget that will lay out the Modi 3.0 government’s economic and fiscal roadmap, especially in the context of global tensions and the upcoming Donald Trump presidency in the US.

All said, experts are of the opinion that India’s prospects are bright as macroeconomic fundamentals are strong. For 2024-25, the real GDP growth is projected at 6.6 per cent and 6.9 per cent for the first quarter of 2025-26. In the next fiscal, the June quarter expansion is pegged at 7.3 per cent, as per the Reserve Bank of India (RBI). Experts opined that the course of the global economy will also depend a lot on the policy initiatives of Trump who will take over as the US President on January 20.