India Expects FY25 Growth of More Than 7%, Says Chief Economic Adviser

Key Highlights: India can grow 6.5-7% in the next decade

In a promising outlook for India's economic landscape, V Anantha Nageswaran, the government's chief economic adviser (CEA), anticipates a robust expansion of over 7% in the fiscal year 2025. Bolstered by physical and digital infrastructure investments, Nageswaran foresees a sustained growth trajectory ranging from 6.5% to 7% over the next decade.

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Inflation Outlook: Steady Amidst Potential Challenges

Nageswaran remains optimistic about inflation, affirming that while unforeseen geopolitical events may occasionally disrupt projections, the baseline scenario suggests a gradual convergence towards the midpoint of the target range. He reassures that India is unlikely to encounter any drastic inflationary spikes soon.

Demographic Dividend and Growth Imperatives

Highlighting the imperative of sustained growth, the Reserve Bank of India (RBI) emphasizes the necessity for an 8-10% growth rate over the next decade to harness India's demographic dividend fully. Despite acknowledging potential inflation risks stemming from extreme weather phenomena and geopolitical tensions, the RBI remains confident in India's growth potential.

Monetary Policy and Inflation Management

Underlining the mandate of India's monetary policy committee to maintain inflation within a target range of 2% to 6%, Nageswaran asserts that the Reserve Bank of India aims for a stable inflation rate of around 4% before considering rate cuts. The emphasis lies on achieving growth while simultaneously managing inflationary pressures.

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Growth Projections and Policy Outlook

Recent pronouncements from the RBI echo optimism, with projections indicating a sustained increase in real GDP growth averaging over 8% from 2021 to 2024. Deputy Governor Michael Patra envisions a remarkable growth trajectory, with India poised to become the world's second-largest economy by 2032 and the largest by 2050.

Policy Continuity and Stability

The RBI's steadfast commitment to its projections reiterated in its April 6 policy, maintains real GDP growth at 7% for FY25, alongside consumer price-based inflation at 4.5%. Such policy continuity underscores the central bank's confidence in India's economic resilience and growth prospects.

Conclusion

Amidst global uncertainties, India's economic trajectory remains promising, buoyed by proactive policy measures, robust investment, and a conducive growth environment. The collaborative efforts of policymakers and financial institutions position India favourably to navigate challenges and realise its formidable growth potential in the coming years.

Also Read: US Federal Reserve Maintains Rates at 23-Year High Amid Inflation Concerns