Goldman Sachs Lowers India’s 2025 GDP Growth Forecast to 6.4% Amid Government Spending Cuts

Goldman Sachs recently revised its forecast for India’s real GDP growth in calendar year (CY) 2025, lowering it by 20 basis points to 6.4% year-over-year. This adjustment follows similar revisions for CY 2024, which was also cut by 20 basis points, bringing the expected growth down to 6.7%.

The primary reason behind these downward revisions is a significant contraction in central government expenditure, particularly a 35% year-on-year reduction during the April-June 2024 quarter, coinciding with the general elections. Additionally, Goldman Sachs highlighted potential challenges for future growth, including the government’s commitment to reducing the fiscal deficit and slower real consumption growth due to tighter household credit conditions.

However, the forecast also suggests that some of these negative impacts could be offset by an expected easing of monetary policy by the Reserve Bank of India, starting in December 2024.