Economy to grow at around 6.5% in FY25 due to threat of global uncertainties: Govt

India is expected to grow around 6.5 percent in the 2024/25 fiscal year, closer to the lower end of its 6.5-7 percent forecast, as global uncertainties pose a threat to domestic growth, the government said.

According to the finance ministry’s monthly economic report released on December 26, the growth outlook for October-December looks bright as rural demand remains flat and urban demand picks up in the first two months of the quarter.

“India’s real GDP grew by 5.4 percent in the second quarter of FY25 and 6 percent in the first half of FY25. The slowdown was mainly concentrated in some manufacturing sectors. Demand-side private final consumption expenditure (PFCE) at constant (2011-12) prices increased by 6 percent in the second quarter of FY25, leading to a 6.7 percent increase in the first half of FY25 ) from 60 percent in the first half of fiscal year 24 to 61.2 percent in the first half of fiscal year 25 percent,” said the ministry’s monthly economic review report for November 2024.

India maintains its economy will grow at a global pace of 6.5-7 percent despite a challenging environment, with the growth outlook expected to be better in October-March than in the first six months of the fiscal year, it said.

“A combination of the central bank’s monetary policy stance and macroeconomic measures could contribute to a slowdown in demand,” the report said.

inflation

Retail inflation moderated to 5.5 percent in November 2024 from 6.2 percent in October 2024, driven by food and core inflation.Food inflation moderated to 9 percent in November from 10.9 percent in October, mainly due to lower vegetable inflation. though it remains in double digits, the report said.

Further, the government’s measures to prevent hoarding of staple pulses and subsidized sale of Bharat-branded pulses have been effective, with pulses inflation easing by 200 basis points to 5.4 percent in November from October .6 percent to 13.3 percent in November as global vegetable oil inflation, based on the FAO index on, it is double digits, he added.

For the 15th month in a row, inflation in the fuel and light group continues in the deflation zone. Core inflation also eased slightly to 3.7 percent in November 2024.

Overall, headline inflation for FY25 (April-November) was low at 4.9 percent compared to 5.5 percent in the corresponding period last year.Core inflation was 3.4 percent, down 1.4 percent from the corresponding period last year compared to However, food inflation rose to 8.3 percent from 6.9 percent in FY24 (April-November), the government said.

Forecast for H2FY25

There are good reasons to believe that the growth outlook for 2015 is better than for 1. Meanwhile, the possibility that structural factors could also have contributed to the slowdown in H1 should not be ruled out, the report said. A combination of monetary policy stance and macroeconomic measures by the Central Bank may contribute to a slowdown in demand, the document says.

On the demand side, rural demand remains resilient, highlighted by two-wheeler sales and domestic tractor sales of 23.2 percent and 9.8 percent, respectively, in October-November 2024 13.4 percent growth, and domestic air passenger traffic registered We therefore expect the economy to grow at around 6.5 percent in real terms over FY25, the government said.

Looking ahead to FY26, new uncertainties have emerged.Global trade growth looks more uncertain than before. Raised stock markets continue to pose a major threat. The strength of the US dollar and a review of the policy rate path in the US put emerging market currencies under pressure, he added.