S&P Global Ratings has kept its prediction for India’s growth unchanged at 6.8% this year. The agency also expects the Reserve Bank of India (RBI) to start reducing interest rates in October. 

S&P Global Ratings projects a 6.9% growth for India’s gross domestic product (GDP) in 2025-26, noting the government’s focus on managing finances and spending on infrastructure.

S&P Global Ratings also mentioned that high interest rates have slowed down economic growth in India, aligning with their forecast of 6.8% GDP growth for the entire fiscal year 2024-2025. 

The agency highlighted the Indian government’s commitment to managing finances and concentrating on infrastructure in the July Union Budget. The budget has allocated Rs 11.11 lakh crore for capital spending in the current fiscal year ending March 2025.

S&P Global Ratings believes the RBI is concerned about food inflation affecting rate cuts. The agency thinks that maintaining a 4% inflation rate will be easier if there is a substantial and lasting decrease in the rate at which food prices rise.

According to S&P, the RBI is expected to start reducing interest rates in October and make two rate cuts this fiscal year ending March 2025. S&P Global Ratings anticipates an average inflation rate of 4.5% for the current fiscal year. 

The RBI’s monetary policy committee is scheduled to meet on October 7-9. To control inflation, the central bank has maintained the benchmark interest rate at 6.5% since February 2023.

After the US Federal Reserve’s 50 basis point interest rate cut, the S&P expects the RBI to cut its interest rate by 25 basis points in the policy review next month.

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