India’s outlook remains positive despite the dip in growth in the first quarter of FY25 to 6.7 percent compared to 7.8 percent in the previous quarter, S&P Global Market Intelligence said on September 2.

The global research firm retained India’s GDP output at 6.8 percent for FY25.

“With private consumption, fixed investment, manufacturing and services all showing solid expansion, underlying momentum remains strong, with our real GDP outlook for FY 2024-25 retained at 6.8 percent,” the agency noted.

The agency highlighted that growth had slipped in the first quarter due to weaker government spending and prolonged heatwave.

“Private demand is showing a steady recovery, albeit somewhat uneven, given the impact of a still soft labour market on urban consumption. Going forward, improving farm output, moderating inflation, and the social support measures announced in the finalised government budget in July should further support private consumption,” S&P said.

The firm also noted that despite corporate profits slowing down, overall fixed investment may remain healthy given the pick in government capex.

After a tepid first three quarters, capex growth picked up 107 percent in July.

S&P Global MI expects a cut in interest rates in December. “As inflation continues to moderate and monetary conditions around the world ease, the RBI may start cutting the repurchase rate in December 2024,” it said.

RBI’s monetary policy committee kept the policy rate on hold at 6.5 percent for the ninth consecutive time at its meeting in August 2024. The next meeting is scheduled for October.