Page 24 - FIPI - Policy Economic Report - May 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

continued reforms and a reduction in the public debt-to-GDP ratio could bring further
upgrades.

CREDIT RATING RATIONALE-
? Rising trade tensions are adversely impacting global growth expectations. The IMF recently
revised its global growth forecast down from 3.3% to 2.8%. Although heightened external risks
due to the imposition of U.S. tariffs could impact growth in the coming quarters, the Indian
economy is not particularly reliant on trade. The IMF expects India to growth 6.2% in 2025 and
6.3% in 2026.The Reserve Bank of India is slightly more optimistic with GDP growth forecasts
of 6.5% in FY26 and 6.7% for FY27.

? India’s favorable demographics, high savings, and potential catch-up in technological
capabilities suggest that India’s medium-term growth prospects remain strong. Government
efforts to improve the investment climate and build out both physical and digital infrastructure
reinforce the country’s medium-term growth prospects.

? The government has ramped up the country’s physical infrastructure capacity in recent years,
focusing on the construction of roads, railways, airports, and seaports. Due to these initiatives,
over the course of the last 8 years the length of national highways has increased 1.5 times,
from 91,287 km in FY15 to 146,195 km as of December 2024. Similarly, the length of electrified
rail route has more than doubled from 22,224 km to 67,723 km as of February 2025. In this
same period, the number of airports has also more than doubled, from 74 to 159, and cargo
handled at ports grew from 581 million tons to 819 million tons in FY24.

? Furthermore, India’s rapidly evolving public digital infrastructure is facilitating innovation,
productivity improvements, and access to services. The Jan Dhan—Aadhar--Mobile (JAM)
trinity, which links bank accounts, Aadhaar IDs, and mobile numbers, has increased financial
inclusion to 80% in 2024. This coupled with the Unified Payments Interface (UPI), a public
platform for digitalizing retail payments, has exponentially increased the volume of digital
payments.

The continuation of these trends could strengthen India's fiscal accounts and help sustain the
country's relatively strong growth outlook.

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