New Delhi: India is now moving better than anticipated in terms of growth; Moody's reported that the percentage growth would go beyond 6.5% for the fiscal year 2025-26. This would be considered a post-moratorium recovery, especially for mid-2024.
The international ratings agency cited that in the current fiscal, growth is projected to exceed 6.3% and would be one of the fastest among major economies worldwide.
Some factors have been mentioned by Moody's to boost this optimistic forecast for growth. The growth is likely to accelerate on government capital expenditure, tax cuts for middle-income tax groups expected to spur consumption, and interest policy cuts from the Reserve Bank of India.
Inflation, which will drop to 4.5% in FY26 from 4.8% in FY25, will be subject to the cautious approach of the central bank toward rate cuts according to the international uncertainties of change in US domestic trade policy and stability of markets.
The report is said to analyze the banking sector's performance, whereby even though there is some deterioration in asset quality- particularly in unsecured retail loans and small business loans - Indian banks are still likely disclosing profitable results. Loan growth in the system is expected to slow down to a pace of 11-13% in the coming FY26, after an average growth of 17% during the period between March 2022 and March 2024.
The good prospects for the economy certainly correspond to the Economic Survey of the Ministry of Finance, which states a GDP growth range of 6.3-6.8% for the immediately succeeding financial year. Thus, with good policies and a sound banking sector, the next few years appear strong for India in terms of economic performance.
[ Source Credit: NDTV ]
