Current Affairs - Economy

The Asian Development Bank (ADB) has revised India’s GDP growth forecast for FY25 to 6.5%, down from the initial estimate of 7%. This revision was made due to factors such as weaker industrial output, muted public spending, and tight monetary policies. In addition, the slowdown in GDP growth during Q2FY25, which fell to 5.4%, has impacted these projections. Despite these challenges, the economy remains supported by strong agricultural output and resilience in the services sector.

India’s retail inflation rate dropped to 5.53% in November, a significant decline from 6.21% in October. This reduction was largely driven by a fall in vegetable prices, especially tomatoes, which had spiked in October, along with stabilizing edible oil prices. This moderation in inflation provided relief to households that had been affected by rising food prices. Core inflation, however, remained steady at 3.7%. The decline reflects the impact of lower food prices and effective inflation management strategies.

The OECD has revised its GDP growth forecast for India in FY25 to 6.8%, up from an earlier projection of 6.6%. This positive outlook is attributed to strong investments, credit growth, and improved agricultural output. While export growth remains subdued, public infrastructure spending and private investment are expected to sustain growth at 6.9% in subsequent years. Notably, the business sector's profits have reached a 15-year high relative to GDP, reflecting robust economic momentum.

The OECD has raised India's GDP growth forecast for FY25 to 6.8%, up from the previous estimate of 6.7%. This revision is driven by factors such as robust public infrastructure spending, strong private investment, and a recovery in agricultural output. The growth is expected to be sustained through FY25 and FY26, supported by investment and rural income growth. Despite global economic uncertainties, India's economy is expected to remain resilient with nearly 7% growth, reflecting its strong internal economic drivers.

Morgan Stanley has adjusted its forecast for India’s GDP growth for FY25 to 6.3%, down from an earlier projection of 6.7%. This revision follows a slowdown in Q2 FY25, where growth fell to 5.4%, the lowest since March 2023, due to weak private consumption and industrial performance. Despite these challenges, the services sector showed resilience, growing by 7.1%. The recovery in the second half of FY25 is expected to be supported by government spending, rural demand improvement, and easing financial conditions. This aligns with Morgan Stanley’s expectation of an average 6.6% growth during the latter half of FY25.