New Delhi:
S&P Global Ratings said on Tuesday that India’s GDP may grow at a rate of 6.5 percent in the next financial year (FY 2025-26) amid global instability. The global rating agency is expected to be normal for the upcoming monsoon season. Also, there may be a decrease in crude oil prices.
According to S&P, “Consumption in the country will increase due to low inflation rate, rebate in income tax in general budget and reduction in interest rates.”
The rating agency further said that tariffs are imposed on goods. For this reason, economies where services have more stake in exports. The effect of tariff will be less there. For this reason, India is in a good position towards tariffs.
Repo rate reduction in up to 75-100 basis points
The S&P estimates that the Reserve Bank of India (RBI) can cut the repo rate up to 75-100 basis points in the coming time. The report said that due to low inflation and crude oil prices, the inflation in the next financial year can be close to 4 percent of the RBI target.
American tariff growth will affect China’s economy
According to S&P, the American tariff hike on China’s exports will affect its economy. The report said, “We included 10 percent of the US tariffs in November Baseline, which means about 25 percent effective American tariff on Chinese goods. In addition, it has now been increased to about 35 percent. It will reduce sugar exports and will also slow the speed of the Chinese economy due to investment and other effects.”
India’s GDP will increase at the rate of 6.7% in FY 2024-25
Earlier, a separate report towards S&P said that India’s GDP will grow at 6.7 percent in FY 2024-25 and it will be the fastest growing economy in the Asia-Pacific region.
The report said that the income of most Indian companies with our rating may slow down, but in the last few years, companies are capable of facing such pressures due to improvement at the operating level and increased financial capacity. Companies present in the country will also benefit from growing economy, increase in consumer expenses and good infrastructure.