A compelling case for pragmatism
When Chinese President Xi Jinping landed in Macau, the world’s gambling capital, the air was thick with anticipation. Macau,often dubbed the “Las Vegas of the East,” is much more than a beacon of wealth and opulence.
S&P Global Ratings maintained India’s growth forecast at 6.8 per cent while noting that the Reserve Bank of India (RBI) may cut interest rates in October.
S&P also retained its gross domestic product (GDP) growth forecast for the financial year 2025-26 (FY26) at 6.9 per cent in its economic outlook for the Asia-Pacific region.
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It further noted that India’s strong growth would help the RBI manage inflation.
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“In India, GDP growth moderated in the June quarter as high interest rates tempered urban demand, in line with our projection of 6.8 per cent GDP for the full financial year 2024-25,” S&P said. In FY24, India’s economic growth rate reached an impressive 8.2 per cent.
“Our outlook remains unchanged: we expect the RBI to begin cutting rates in October at the earliest and have pencilled in two rate cuts this financial year (ending March 2025),” S&P said.
It noted the central bank’s concern about food inflation, stating that unless there is a lasting and meaningful decline in food price increases, it will be tough to maintain headline inflation at 4 per cent, and estimated inflation to average 4.5 per cent in the current financial year.
S&P emphasised the Centre’s focus on fiscal consolidation, as outlined by Finance Minister Nirmala Sitharaman in the July Budget.
Notably, the budget allocated a total of Rs 11.11 trillion for capital expenditure, and the Centre has set a target to bring down the fiscal deficit below 4.5 per cent of GDP by FY26.
Earlier this month, the World Bank upgraded India’s GDP growth forecast to 7 per cent from its earlier projection of 6.6 per cent. On similar lines, the International Monetary Fund also revised the projection upwards from 6.8 per cent to 7 per cent.
Speculation about an RBI rate cut has risen following the US Federal Reserve’s decision to announce larger-than-expected reductions in rates, 50 basis points, amid concerns of a slowdown in the US economy.
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