New Delhi:
India’s GDP growth rate can be more than 6.5 percent in FY 2025-26. The reason for this is expected to increase consumption due to increase in government capital expenditure and reduction in interest rates by RBI and reduction in income tax. This information was given in the report of rating agency Moody’s.
India will remain in the world’s fastest growing economies
The report said that India’s economic growth rate is ready to grow rapidly after partially slowing down in mid -2024 and it will remain in the fastest growing economies in the world.
Moody’s Ratings said, “In order to promote government capital expenditure, consumption, the income tax cut for middle class income groups and softening in monetary policy will be more than 6.5 percent for India’s real GDP growth rate for financial year 2025-26, which will be 6.3 percent in FY 2024-25.”
Average inflation is expected to be 4.5% in FY 2025-26
Moody’s hopes that India’s average inflation will decrease to 4.5 percent in FY 2025-26, which was 4.8 percent last year. This will have enough space for the RBI to cut interest rates to promote development.
The rating agency further said that due to low interest rates and more liquidity in banking systems, banks will have more money to give loans to customers and businessmen. RBI Governor Sanjay Malhotra had reduced the repo rate by 25 basis points to 6.25 percent last month.
Stable Outlook estimates for banking sector
The report estimates stable outlook for the banking sector, but it is said that some stresses may be seen in unsafe retail loans, microfinance loans and small business loans. However, banks will remain in profits continuously. The reason for this is the possibility of decline in net interest margin (NIM) amidst the cut in interest rates.
Earlier, a report by SBI Research said that the GDP growth rate is estimated to be 6.5 percent in FY 25. At the same time, the growth rate can be 7.6 percent in the fourth quarter.