India's real GDP growth to come in at 6.2% in FY25, 6.5% in FY26: HSBC

Real GDP growth will come lower than the official estimate at 6.2 per cent in the ongoing fiscal year and inch up to 6.5 per cent in FY26, a foreign brokerage said on Tuesday.

The Q2FY25 growth number at 5.4 per cent was disappointing, HSBC said in a report, adding that it expects the gross value added growth in the December quarter to go up to 6.5 per cent. 

 

"Our 100 indicators analysis shows that growth indicators have improved since September, but remain weaker than June," the report said.

It said 65 per cent of the indicators are growing at a positive clip in the December quarter compared to 55 per cent in the July-September period, and added that improvements have been the clearest in agriculture, exports, and construction. 

Even urban consumption, which has been discussed a lot in recent weeks in a concerning way, has shown some improvement in the December quarter, the report said.

The brokerage said utilities and private investment indicators continue to remain subdued, and things are still not as good as the June quarter, when about 75 per cent of the indicators were growing positively.

It can be noted that the Ministry of Statistics expects the FY25 GDP growth to come at 6.4 per cent as per the latest estimates, while the Reserve Bank of India (RBI) had last month revised down its projection to 6.6 per cent from 7.2 per cent.

On inflation, it pegged the FY25 price rise to come at 4.9 per cent and cool down to 4.4 per cent in FY26.

"We forecast inflation to fall from 5.5 per cent in November to 5.3 per cent in December, and to just-below 5 per cent in January," the report said.

The RBI is likely to deliver two rate cuts of 0.25 per cent each during the February and April policy reviews, the brokerage said.

"Some of the responsibility to push up growth will fall on the shoulders of the monetary policy," it said.

The brokerage said the fiscal math shows that tax revenues are softening, and expenditure will have to be disciplined in FY26, if the fiscal deficit target is to be met.