'Omens are good for us': CEA Anantha Nageswaran sees steady growth rate of 6.5-7% for rest of decade beyond FY25

Remaining optimistic about growth potential, the government’s Chief Economic Advisor V Anantha Nageswaran on Wednesday said there is high possibility that the economy may have grown at over 8% in FY24 and could expand at 7% or more in the current fiscal year.

A lot would, however, depend on how the monsoon shapes up, he said. “While expectations are that we will have an above normal monsoon but spatial and temporal distribution will matter,” he said at an event organised by National Council of Applied Economic Research (NCAER).

The economy is estimated to grow by 7.6% in FY24 by the Central Statistics Office in its second advance estimates while the Reserve Bank of India has forecast GDP growth at 7% this fiscal.

The CEA was also bullish about the economy in the next few years and said that “the omens are good for us to continue the steady growth rate of between 6.5% and 7%” for the rest of the decade beyond FY25. He also highlighted that because of the investments made on the supply side; both physical and digital infrastructure the economy is better place than before to be able to pursue non inflationary growth.

He also said that impediments should be converted into opportunities for growth. Removing impediments such as deregulating the compliances and inspections at the local and state government level, continued investment and focus on skilling, as well as health of the young demography will help meet close to 7% growth over the next few years.

The CEA also stressed that India would not see any "nasty upside" on inflation. “I think the expectation is that subject to the monsoon, it will continue to head towards the midpoint of the target range (of 4%),” he said while noting that there can always be scenarios where geopolitics can cause inflation to be more than expected.

Meanwhile, the World Bank and think tank NCAER were also bullish about the growth prospects for the economy.

Auguste Tano Kouamé, World Bank Country Director for India said the agency’s forecast for India’s GDP growth for FY25 will be updated soon. “It is likely to be upgraded as signs are quite good for India,” he said at the event.

He also highlighted that if policies are put in place by the government, India’s growth can be as high as 8% when the world economy picks up speed.

In its South Asia Development Update in April, the World Bank had pegged India’s GDP growth at 6.6% in the current fiscal year 2024-25 after an estimated growth of 7.5% last fiscal. 

Poonam Gupta, Director General, NCAER said GDP growth in FY25 should also be at over 7%. “Looking at the numbers this year as well, one doesn’t see any reason to be more guarded. 7% plus seems like a good baseline,” she said, adding the Indian economy has become more resilient to the isial shocks and this bodes well for the economic outlook.