(Reuters) – India's economy is expected to grow around 6.5% in the 2024/25 fiscal year, near the lower end of the 6.5%-7% forecast, as global uncertainty poses a negative threat, the government said on Thursday.
The outlook for growth in October to December looks bright, with rural demand remaining strong and urban demand growing in the first two months of the quarter, according to the financial service's November economic report.
Growth was slower than expected in July to September, hampered by weak growth in output and consumption. India has maintained that its economy will grow at a pace that beats the world at 6.5%-7% despite the challenges.
The outlook is expected to be better in October-March than in the first six months of the financial year, it said.
“A combination of monetary policy stance and more prudent measures by the central bank may contribute to the reduction in demand,” the report said.
India's central bank has kept interest rates unchanged for 11 straight policy meetings, despite calls for rate cuts to support growth amid high inflation.
For the next fiscal year starting April 1, 2026, the report said, new risks have emerged, such as the uncertainty of global trade growth and the strong US dollar.
US President-elect Donald Trump has threatened several nations, including India, with higher import tariffs, raising the risk of a global trade war after he took office on Jan. US yields.
However, India's growth outlook for 2025/26 and beyond is bright on a domestic economic basis, the finance ministry said.