Axis Bank report: India Outlook 2025:There is no possibility of getting relief from inflation in India soon. This is according to the latest research report of Axis Bank, one of the major private banks of the country, India Economic and Market Outlook 2025 (India Economic and Market Outlook 2025) It is said in. The report makes it clear that food and core inflation rates are interlinked, and are likely to remain under pressure for a long time. Apart from this, the report also says that the challenges of the Indian economy are increasing due to the uncertain global economic environment and high interest rates.
Why will inflation remain a challenge?
According to the report, the main reason for inflation in India is the sharp rise in the prices of food, especially vegetables. Retail inflation rate was recorded at 6.21% in October 2024, which is outside the tolerance range of RBI. Vegetable prices have reached their highest levels ever, while the lack of supply is not able to compensate for the demand. According to the report, demand has also increased due to the income transfer schemes of the government, which has further increased this pressure. Neelkanth Mishra, Chief Economist of Axis BankThis report, prepared under the leadership of ICICI Bank, states that “Core and food inflation in India have been growing at a similar pace for a long time. However, in the current situation, the supply response may be weak, which will keep inflation under pressure.”
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Will improve due to local factorsgrowth rate
Despite global uncertainties, it has been estimated in this report that India’s growth rate can be up to 7% in the financial year 2026. This estimate is based on factors like capital formation, resumption of capex cycle and increasing fiscal expenditure during FY 2025. It has also been mentioned in the report that the credit growth situation may improve due to reduction in CRR and other prudential measures by RBI. Along with this, backended fiscal spending is also expected to support growth.
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Impact of worldwide instability
It has been said in the report that the global economic growth rate is expected to remain stable at 3.2% in the calendar year 2025, which is 30-40 basis points less than the pre-Covid level. Changes in trade policy and interest rates in America and China will also affect India. Despite this, India’s domestic factors, such as political stability and prospects for reform, are positive for growth.
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RBI’s role and challenge
RBI has revised India’s GDP growth rate to 6.6% for FY 2025. Improvement is expected in the second half of FY 2025, but high inflation rate and uncertainty of food supply will remain major challenges. The report said that “Growth in India will depend mainly on local factors. Reforms to promote capital formation and credit growth will play an important role.” Despite inflation and instability in the global economy, India’s growth rate is expected to reach 7% by 2026. This report not only underlines the strength of India’s economy, but also emphasizes that domestic reforms and fiscal policy measures will play an important role in reviving the growth rate.
