India Ratings & Research (Ind-Ra) has raised India's GDP growth forecast for 2024-25 to 7.5 per cent from 7.1 per cent projected earlier as it expects the Union Budget to give a further fillip to the economy.

The report states that ongoing growth momentum led by government capex, healthier balance sheets of banks, and incipient private corporate capex cycle has now found support from the Union Budget.

The budget aims to bolster spending in the agricultural and rural sector, improve credit delivery to MSMEs and incentivise employment creation in the economy.

Ind-Ra expects the above-normal monsoon coupled with measures announced in the Union Budget for FY25 to boost the demand for goods and services consumed by rural and lower-income households.

"Ind-Ra believes these measures would help in broad-basing the consumption demand," the report observed.

Ind-Ra expects Private Final Consumption Expenditure (PFCE) to grow to a three-year high of 7.4 per cent in FY25, up from 4 per cent in FY24.

While food inflation poses a risk, the report expects lower average retail inflation in the current financial year compared to the previous year, to support real wage growth.

The RBI has projected a growth rate of 7.2 per cent for the Indian economy while the Economic Survey has estimated GDP expansion between 6.5-7 per cent.

However, Chief Economic Advisor Anantha Nageswaran said achieving a 7 per cent GDP growth rate “is doable” for India despite the global environment having become more challenging since the beginning of the year.

“We were more confident of a 7 per cent GDP growth when we wrote the interim Economic Survey in January. Since then the global environment has become even more polarised. Given that we feel 7 per cent is doable, but yet we want to be not necessarily cautious but prudent,” he added.