EY Predicts Slower Growth For India In FY25 Amid Global And Domestic Pressures

New Delhi, May 29 (KNN) India's economic expansion is projected to decelerate in the current financial year as a result of combined international and domestic pressures, according to EY's latest Economy Watch report published Wednesday. 

The consulting firm emphasised that maintaining growth momentum will require strategic coordination of monetary and fiscal policy measures.

The report indicates that despite the anticipated slowdown, India is positioned to remain among the world's fastest-growing major economies. 

This resilience stems from robust domestic consumption patterns, declining inflationary pressures, and accommodative monetary policies that are expected to stimulate private sector investment activity.

EY's analysis points to several global factors contributing to the cautious economic outlook. 

Persistent supply chain disruptions, newly implemented trade tariffs by the United States, and broader uncertainties surrounding international trade relationships and geopolitical developments are creating headwinds for economic growth.

The report recommends a balanced policy approach combining monetary and fiscal interventions to sustain economic activity. On the monetary side, continued interest rate reductions could bolster consumer spending and business investment. 

Regarding fiscal policy, EY highlighted the importance of reinvigorating public investment, particularly government capital expenditure, which experienced slower growth during the 2024-25 financial year.

Official projections from the National Statistical Office in February estimated India's economic growth at 6.5 percent for 2024-25, with quarterly growth rates forecast at 6.5 percent for June, 5.6 percent for September, and 6.2 percent for December. 

The NSO is scheduled to release provisional GDP data for FY25 and fourth-quarter figures on May 31.

Recent monetary policy developments have supported the growth outlook. In April, the Reserve Bank of India's Monetary Policy Committee unanimously approved a 25 basis point reduction in the repo rate to 6 percent, following a similar cut in February that marked the first rate reduction since May 2020. 

Market analysts anticipate continued rate cuts driven by sustained low inflation, favorable agricultural output from the kharif season, and expectations of above-normal monsoon conditions benefiting the agricultural sector.

The Reserve Bank of India has projected GDP growth at 6.5 percent for the 2025-26 financial year. The central bank's next monetary policy meeting is scheduled for June 6, where further policy adjustments may be considered based on evolving economic conditions.

(KNN Bureau)