India is expected to record 6.5% real GDP growth in FY25 and FY26, according to EY’s December 2024 Economy Watch report. This projection aligns with the country’s resilient economic fundamentals and strong momentum.

BulletsIn

• FY25 real GDP growth estimated at 6.6%, combining Q1 (6.7%), Q2 (5.4%), Q3 (6.8%), and Q4 (7.2%) estimates.
• Growth could drop below 6.5% if government capital expenditure remains subdued in Q3 FY25.
• Q2 FY25 GDP growth slowed to 5.4%, down from 6.7% in Q1.
• Mixed economic signals from October-November high-frequency data:
• Manufacturing PMI eased to 56.5 in November, down from 57.5 in October.
• Services PMI stable at 58.4 in November, driven by global demand.
• Retail motor vehicle sales rose 11.2% in November; two-wheeler and tractor sales up 15.8% and 29.9%, respectively.
• IIP growth improved to 3.5% in October, compared to 3.1% in September, led by manufacturing and electricity.
• CPI inflation fell to 5.5% in November from 6.2% in October due to declining vegetable prices; core CPI steady at 3.7%.
• WPI inflation moderated to 1.9% in November from 2.4% in October.
• EY suggests medium-term GDP growth could sustain at 6.5% with accelerated government capital expenditure.