S&P Global Ratings has hiked India’s gross domestic product (GDP) growth rate forecast for the Financial Year 2024 to 6.4 per cent from earlier 6 per cent. But for the next fiscal – FY25 – GDP growth projection has been slashed by 50 basis points.

It said that robust domestic momentum has offset headwinds from high food inflation and weak exports.

“Still, we expect growth to slow in the second half of the fiscal year amid subdued global growth, a higher base, and the lagged impact of rate hikes. As a result, we have lowered our outlook for growth in fiscal 2025 to 6.4 per cent, from 6.9 per cent,” S&P said.However, the agency’s projection is lower than the central bank’s 6.5 per cent.

The fixed investment in the country has recovered more than private consumer spending. For FY26, the agency has kept India’s GDP growth projection unchanged at 6.9 per cent.

S&P Global on inflation said that in FY24, India is expected to report inflation of 5.5 per cent under the RBI’s upper tolerance limit of 6 per cent while in FY25, it is expected to be lower at 4.5 per cent.

“In India, there was a transitory spike in food inflation in the July-September quarter, but it appears to have had little effect on underlying inflation dynamics. Still, headline inflation remains above the RBI’s target of 4 per cent, suggesting it will be a while before the rate cycle turns,” it added.

Recently, the Ministry of Finance in its monthly economic report for October said inflationary risks continue to persist keeping the Centre and the RBI on high alert.

With uncertainties linked to higher food and energy prices persisting amid geopolitical tensions, the Finance Ministry said that risks of recession may reappear in 2024.

The recent decline in international crude oil prices and continued moderation in core inflation are likely to control inflationary pressures, the report said.

Earlier, Goldman Sachs highlighted that India’s real GDP growth will decline marginally to 6.3 per cent in 2024 from the 6.4 per cent estimated for 2023 citing the upcoming Lok Sabha elections.

The headline consumer price inflation is likely to be at 5.1 per cent for 2024 against 4.7 per cent estimated by the Reserve Bank of India.