Crisil Report Signals Economic Optimism: Agriculture and Inflation Trends Align for Growth

Crisil's recent report highlights the improvement in India's economy with such developments as recovering domestic demand, robust rabi crop production, and softening inflation in the fourth quarter of FY25. They are likely to further fuel consumption and propel economic growth, even in the face of external threats like the rise in US tariffs.

 

Industrial Growth:

Manufacturing production, as indicated by the Index of Industrial Production (IIP), registered high growth in the second part of FY25, boosting major industries such as petroleum products, machinery, and textiles.

 

Infrastructure and Capital Goods Growth:

Higher production of capital goods and infrastructure goods indicate a steady pick-up in building activity and capital spending, essential for long-term economic growth.

 

Positive High-Frequency Indicators:

Indicators such as RBI’s Quarterly Industrial Outlook survey and Consumer Confidence Survey reveal strengthening demand and improved consumer sentiment in both rural and urban areas.

 

External Risks:

The report warns of challenges from slower global growth and potential reciprocal tariffs on Indian exports due to US tariff hikes, which could impact investments and exports.

 

GDP Growth Projection:

In spite of risk factors, Crisil forecasts India's GDP growth at 6.5% in FY26, driven by monetary loosening, relief from taxes, and expected normal monsoon.

 

Sources: The Print, Economic Times, SME Times