New Delhi: ICRA has raised its projection for India’s economic growth in FY25 back to 6.5 per cent, reversing its earlier downgrade, after the government’s recent consumption-boosting measures. The agency said sharp and unexpected GST rate cuts, along with income-tax relief, have released nearly Rs 3 lakh crore into household hands this year, fuelling demand.

“The GST rate cuts were unexpected and implemented very quickly,” said Aditi Nayar, chief economist, ICRA. “We had cut our FY25 growth forecast from 6.5 per cent to 6.2 per cent and then to 6 per cent because of tariff hikes and weaker exports. With this consumption stimulus, we are back at 6.5 per cent.”

Nayar added that the combined effect of the GST relief, earlier income-tax reductions, and the likelihood of an RBI rate cut later this year would further support consumer spending and overall demand. On the banking sector outlook, Anil Gupta, senior vice-president, ICRA, said higher disposable incomes should drive retail loan demand while keeping asset quality........

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