The Report discusses the sordid domestic economic performance in H1FY25 and threshes out reasons for the same. It posits that H2 could be brighter subject to sustenance of festive momentum seen in Q3, increased government spending, and a bountiful rabi harvest. It notes that both the Union and States have ample headroom to increase their spending in the rest of FY25. Despite the slowdown, the Report argues that a rate cut in Dec’24 RBI policy remains unlikely owing to concerns over inflation and exchange rate. At the same time, chance of a rate cut for Feb’25 have increased, and there could be increased liquidity in the interim. Global volatility, while currently low, could go up in Jan’25 once Mr. Trump assumes office and his policies unravel.
