New Delhi, Oct 29 (UNI) India’s gross domestic product (GDP) growth this fiscal is projected at 6.5 per cent, with risks tilted to the downside, according to a CRISIL report, released today. This is mainly driven by strong domestic consumption, a good monsoon, tax relief, and anticipated interest rate cuts.
Pointing towards the downside, CRISIL noted that exports to the United States (US) shrank by 11.9 pc year-on-year in September as higher tariffs kicked in. The rating agency also showed some optimism if a trade deal with the US were concluded soon.
Also, the rating agency attributed the subdued growth in primary goods, which led to the steady industrial growth as measured by the Index of Industrial Production (IIP) at 4pc year-on-year in September from 4.1pc in August.
The Credit Rating Information Services of India Limited (CRISIL) said, “The September quarter, however, saw a strong 4.1 per cent growth compared with 2 per cent in the June quarter, which is driven by the infrastructure and construction goods (11.5pc vs 6pc), consumer durables ( 7pc vs 2.7pc) and primary goods (2pc vs 1.4pc) segments.”
CRISIL sees an interplay of downside and upside risks of growth. The downside risks stem from an uncertain global environment, and upside risks from the improvement in domestic demand conditions post the Goods and Services Tax (GST) rationalisation.
Moreover, domestic demand, particularly private consumption, is expected to underpin India’s growth, which is driven by tax relief, rate cuts, and soft inflation.
The income tax cuts announced in the union Budget 2025-26 and GST rationalisation are expected to boost discretionary spending.
Moreover, the Reserve Bank of India’s (RBI) interest rate cuts so far in 2025 have already lowered broader lending rates in the economy, such as money market rates and bank lending rates.
CRISIL expects another rate cut this year amid low inflation and risks to growth. RBI has also cut the cash reserve ratio (CRR) by 25 basis points (bps) in September and October each.
With two more cuts of 25bps each slated by the end of November, banking liquidity is expected to get a boost.
Inflation is expected to stay benign this fiscal on the back of low crude prices and the GST rationalisation, giving household budgets elbowroom for discretionary spending.
