Despite GDP downturn, India’s economic conditions remain positive: SP Global Market Intelligence

New Delhi [India]September 3 (ANI): Despite the growth slowdown in the first quarter of 2024-25, India's economic conditions remain positive, said SP Global Market Intelligence. Financial information and analytics firm SP Global Market Intelligence kept its forecast for India's real GDP growth for the full year 2024-25 unchanged at 6.8 per cent.

India's real GDP grew by 6.7 percent in the April-June quarter – the first quarter of 2024-25 – compared to 8.2 percent in the same quarter last year. The RBI had forecast growth of 7.1 percent for the April-June quarter of 2024.

Lower government spending ahead of the Lok Sabha elections and a prolonged heatwave impacted economic growth in the quarter.

“With private consumption, fixed asset investment, manufacturing and the services sector all showing solid growth, underlying momentum remains strong and our forecast for real GDP for fiscal year 2024-25 remains at 6.8 percent,” SP Global Market Intelligence said.

India's GDP grew by an impressive 8.2 percent in fiscal year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2 percent in 2022-23 and 8.7 percent in 2021-22.

Many global rating agencies and multilateral organizations have also revised their growth forecasts for India upwards.

Looking ahead, improving agricultural production, moderating inflation and the social support measures announced in the July budget are expected to further boost private consumption in India.

“The momentum in corporate earnings growth is gradually slowing, but given the growing industrial capacity and the government's continued focus on infrastructure investment, overall fixed asset investment growth should also remain healthy,” SP Global Market Intelligence added.

From the second half of the financial year onwards, the financial framework conditions are also expected to improve.

The RBI's Monetary Policy Committee left the repo rate unchanged for the ninth consecutive meeting in August and is likely to maintain the status quo at the October policy meeting as well, SP Global Market Intelligence noted.

However, as inflation continues to moderate and monetary conditions ease globally, the RBI may start cutting the repurchase rate in December 2024, according to SP Global Market Intelligence.

Apart from the nine suspensions, the RBI, in its fight against inflation, increased the repo rate by a cumulative 250 basis points to 6.5 percent since May 2022. Raising interest rates is a monetary policy tool that usually helps in curbing demand in the economy, thereby helping in bringing down the inflation rate. (ANI)