Economy well poised for 6.5-7% growth in FY25: CEA

New Delhi: Chief Economic Advisor V Anantha Nageswaran on Friday said the Indian economy is on its way to achieve 6.5-7 per cent growth in the current fiscal, notwithstanding the GDP growth falling to a 15-month low of 6.7 per cent in the April-June quarter this fiscal. According to data released by NSO, the GDP growth rate slipped in the first quarter to 6.7 per cent, mainly due to deceleration in farm production, which slipped to 2 per cent from 3.7 per cent in the April-June quarter of 2023-24. Talking about the farm sector growth, he said there are very few deficit monsoon subdivisions and most divisions have experienced normal rainfall. The sowing of kharif is higher than last year. "I think, the agriculture and allied sectors will see a rebound in their growth rates as we head further into the financial year," he said.

Rural consumption has indeed stabilised and improved, and a good monsoon will give a further boost to rural and overall consumption in the coming quarters. As far as the outlook is concerned, he said, "The growth momentum remains strong. The first quarter slowdown was anticipated due to the election and due to slowdown in government spending...there is healthy progress in monsoon, corporate and bank balance sheets are in good shape". The budget also provides a further boost to the continued good momentum, particularly with the focus on employment, generation, skilling, agriculture, MSME sector and energy security in the medium term, he said.

Therefore, he said, the Indian economy can look forward to a growth rate of 6.5-7 per cent and can grow at a rate of 7 per cent plus on a sustained basis if structural reforms undertaken over the last decade are further expanded in the coming years. He exuded confidence that growth momentum remains strong and 6.5-7 per cent growth is very realistic for the current fiscal. Talking about risk factors, Nageswaran said financial markets globally still remain elevated and volatile in the light of political development that might still unfold in other parts of the world, and therefore, potential financial market correction can have implications for sentiment and therefore, on private consumption. Stressing that inflation expectations have inched upside slightly again, he said, it may be reflecting transient factors, but overall, the inflation remains. Expectations remain below last year's levels based on an outsourced inflation expectations survey of the RBI, he added.