India Sees Economic Growth at 6.5% for the Year Through March
India expects the economy to grow at around 6.5% in the year through March, against 8.2% a year before, after the economy slowed unexpectedly in the July-September quarter.
(Bloomberg) -- India expects the economy to grow at around 6.5% in the year through March, against 8.2% a year before, after the economy slowed unexpectedly in the July-September quarter.
“We expect the economy to grow at around 6.5% in real terms in financial year 2024-25,” the Department of Economic Affairs said in its monthly economic review for November. In the Economic Survey in July, the government had forecast growth of 6.5%-7%. The latest take is in line with the Reserve Bank of India’s revised 6.6% growth forecast for the year.
“India’s growth outlook in FY26 for the coming years is bright when viewed through the lens of Indian domestic economic fundamentals, but is also subject to fresh uncertainties,” the report, released on Thursday, said.
Strong growth in two- and three-wheeler sales, and domestic tractor sales, in October and November point to resilient rural demand, while a robust pickup in air passenger traffic in the period indicate recovery in urban demand. However, risks to global growth are building up and global trade next year is becoming uncertain amid threats of higher tariff by the US.
Policies of advanced countries have weakened emerging market currencies and lowered their degrees of freedom. “This will weigh on the minds of monetary policymakers in emerging economies, India included,” the report said. The rupee fell to a fresh record low of 85.2650 Thursday.
The second half of the current financial year, or October-March period, will be better than the first half, the report said, while partly blaming the Reserve Bank of India’s restrictive policies for the slowdown. “The combination of monetary policy stance and macroprudential measures by the central bank may have contributed to the demand slowdown,” it said.
The central bank kept interest rates unchanged for nearly two years as it wanted to bring down inflation durably around its target of 4%.
Growth slowed unexpectedly to a seven-quarter low of 5.4% in the July-September period, which was also 160 basis points lower than what the central bank had forecast. This led the RBI to revise its full year forecast to 6.6% from 7.2% earlier. Economists now expect that new RBI Governor Sanjay Malhotra will cut interest rates in the February policy.
“In sum, sustaining growth will require a deeper commitment from all economic stakeholders to growth,” the report said.
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Business NewsEconomyIndia Sees Economic Growth at 6.5% for the Year Through March
First Published:26 Dec 2024, 07:36 PM IST
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