Moody’s Analytics has revised its forecast for India’s GDP growth in the calendar year 2025, lowering it to 6.1% from an earlier estimate of 6.4%. This adjustment comes amidst rising concerns over potential US tariff threats that could impact several of India’s key export sectors, including textiles, gems and jewellery, and medical devices. With global trade uncertainties increasing, Moody’s has cautioned that these developments might temporarily slow India’s economic momentum.
However, despite the cut in projections, Moody’s maintained that India’s economy continues to show resilience. Unlike many other Asian economies that rely heavily on exports, India’s growth is largely driven by domestic consumption and investment. This internal strength positions the country better to absorb global shocks, such as potential trade disruptions or geopolitical tensions.
To further support economic activity, the Reserve Bank of India is expected to implement a more accommodative monetary policy stance. Analysts anticipate that the central bank could reduce the repo rate to 5.75% by the end of 2025. Lower interest rates would likely ease borrowing costs, promote private investment, and stimulate consumer spending, all of which could help cushion the economy against external pressures.
Even though the 2025 growth forecast has been dialed back, Moody’s Ratings holds a positive view on India’s medium-term prospects. For the fiscal year 2025-26, India’s GDP growth is projected to surpass 6.5%. This optimism stems from several supportive measures, including increased government spending on infrastructure and capital expenditure, tax relief aimed at boosting household consumption, and continued efforts to maintain macroeconomic stability through monetary easing.
Moody’s believes that India’s overall economic fundamentals remain strong, and the policy environment is supportive of recovery and expansion. While global uncertainties may pose short-term challenges, India is expected to remain one of the fastest-growing major economies. With the right mix of reforms, fiscal support, and investor confidence, the country is well positioned to return to a higher growth trajectory beyond 2025.
In summary, India’s economic outlook for 2025 has been slightly dimmed by external risks, but the broader growth story remains intact. Moody’s downgrade to 6.1% is a cautionary signal, not a cause for alarm. With resilient domestic demand, proactive monetary policy, and continued infrastructure development, India’s economy is likely to rebound strongly in the coming fiscal year.
