In a recent exclusive interview with DH’s Arup Roychoudhury, Crisil’s Chief Economist Dharmakriti Joshi highlighted the potential challenges facing the Indian economy in the fiscal year 2025 (FY25). Joshi emphasized the need for the government to announce additional measures promoting ease of doing business in the upcoming interim budget for 2024.
Reflecting on the current state of the global and Indian economies in FY24, Joshi noted that India has exceeded growth expectations, largely driven by government focus on infrastructure development. While the world economy, including the United States, has also grown faster than anticipated, the looming threat of a global economic slowdown and tightening financial conditions may impact future growth.
Joshi predicted a ‘cyclical slowdown’ for the Indian economy in FY25, citing the potential impact of the global economic slowdown and tightening financial conditions on domestic demand. Crisil’s current growth estimate for India in FY25 stands at 6.4%, a dip from the current fiscal year.
When asked about the outlook for interest rate cuts, Joshi acknowledged the delicate phase of global monetary policy. While inflation remains a concern for central banks, the risk of over-tightening poses the threat of a recession. Joshi suggested that major central banks in the US and Europe may initiate rate cuts by June, with Latin America already reducing rates. However, the Reserve Bank of India is expected to delay any rate cuts until after June.
Looking ahead to the interim budget presentation on February 1, Joshi highlighted the government’s fiscal conservatism, focusing on increasing investment rather than consumption. He emphasized the importance of policies that support vulnerable sections through health insurance, free foodgrains, rural housing, and other schemes.
As the Indian economy braces for potential headwinds in FY25, the government’s policy decisions in the upcoming interim budget will play a crucial role in shaping the economic trajectory and fostering resilience against external risks.
