India’s macroeconomic fundamentals are anticipated to hold up well in the second half of FY25, according to global brokerage firm Nomura, thanks to consistent growth and low, underlying inflation.
Nomura predicts that India’s consumer price index would drop from 5.7% at the end of FY24 to 4.8% in the first quarter of FY25. The company refers to the low, underlying inflation as exceptional given the global context of “sticky inflation.”
The worldwide brokerage business predicts that the move to La Nina, sufficient rice supplies, and increasing pulse production will lower food inflation.
Nomura analysts also predicted that the next Union budget will continue to prioritize capital spending and fiscal restructuring in a note.
The brokerage has a positive impact on domestic industries like production and investing as opposed to consuming.
In a previous report, Nomura stated that the policy orientation, “which we expect to remain largely unchanged,” will probably be highlighted in the Union Budget.
According to the brokerage firm, “the government is likely to pursue fiscal consolidation and prioritize investments/capital expenditure.”
“We expect the government to continue the pace of governance and administrative reforms, leaving states to work around the more intractable reforms around land and labor,” Nomura said, noting that reforms in India had withstood the political test.
The country’s growth forecasts, inflation dynamics, current account situation, and budgetary developments are all reportedly “all encouraging,” and India’s economic fundamentals are still robust.
