S&P Ups India’s 2025 GDP Growth Forecast to 6.5% on Monsoon Optimism, Policy Support

Global ratings agency S&P has revised upward its forecast for India’s GDP growth in 2025, projecting a 6.5% expansion, up from its earlier estimate of 6.3%. The revision reflects growing optimism over favourable macroeconomic conditions, including expectations of a normal monsoon, easing global crude oil prices, and recent policy measures such as income tax relief and monetary policy support.

The agency noted that India's domestic demand remains resilient, supported by rising private consumption and public investment. “A combination of lower commodity prices, especially crude, coupled with potential interest rate cuts by the Reserve Bank of India (RBI), is expected to boost economic momentum in the coming quarters,” S&P said in its latest regional outlook report.

A normal monsoon is critical for India’s largely agrarian economy. The India Meteorological Department has already predicted an above-normal monsoon for this year, raising hopes for rural consumption recovery and a boost to the agricultural sector. A healthy rural economy often translates into stronger demand for goods ranging from tractors and fertilizers to FMCG products.

S&P also acknowledged the impact of fiscal support measures, including income-tax concessions announced in the interim budget, which are expected to raise disposable incomes and spur consumption-led growth. Additionally, monetary easing in the form of potential rate cuts in the second half of the year is likely to lower borrowing costs for businesses and consumers alike.

The improved forecast comes at a time when India is positioning itself as a global investment destination amid shifting geopolitical and trade alignments. However, S&P warned of external risks such as global financial volatility, geopolitical tensions, and supply chain disruptions that could weigh on growth.

Despite these headwinds, India remains among the fastest-growing major economies in the world, with structural reforms and demographic strengths continuing to support its long-term growth trajectory.

The upward revision from S&P adds to a growing consensus among economists and institutions that India is poised to outperform its peers in the near term, provided macroeconomic stability is maintained and policy momentum continues.

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