Overview

• S&P cites resilient domestic demand supported by a largely benign monsoon, income- and GST-rate reductions, and faster government investment.
• Recent investment gains are concentrated in public capex as private capital spending remains sluggish, raising concerns about the composition of growth.
• The agency trims its inflation projection to 3.2% for the fiscal year following a sharper-than-expected fall in food inflation.
• S&P expects the Reserve Bank of India to deliver a 25 basis point rate cut this fiscal given the improved inflation backdrop.
• Heightened U.S. trade barriers, including sharply higher tariffs on some Indian goods, pose a notable downside risk to exports and the outlook.