India's Economic Resilience: S&P Projects Strong Growth & Banking Stability

S&P Global Ratings forecasts India's economy to grow 6.5-7% annually until 2027, driven by infrastructure spending and private consumption. This growth is expected to stabilize banks' asset quality through healthier corporate balance sheets and improved risk management. However, external uncertainties could affect capital expenditure growth.

S&P Global Ratings has projected India's economy to experience an annual growth rate of 6.5-7% through to 2027. This optimism is attributed to increased infrastructure spending and private consumption, which are expected to sustain the nation's growth momentum.

The rating agency's global bank outlook report highlights that robust economic growth will support banks' asset quality. This optimistic forecast is buoyed by healthier corporate balance sheets, stricter underwriting standards, and enhanced risk management practices within the sector.

Despite this positive outlook, S&P notes concerns over delayed capital expenditure growth due to uncertain external conditions. Additionally, while bank loan growth is predicted to surge, deposit growth might lag, potentially affecting credit-to-deposit ratios. The Reserve Bank of India's intensified focus on compliance and governance further adds layers to the financial landscape.

(With inputs from agencies.)