 "V Anantha Nageswaran, Chief economic advisor")
V Anantha Nageswaran, Chief economic advisor
The Gross Domestic Product (GDP) growth data for the first quarter of FY25 showed a continued pickup in rural consumption, and the economy in the medium term could grow at 7 per cent on a sustained basis if it builds on the structural reforms undertaken in the last ten years, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Friday.
“Rural consumption has indeed stabilised and has been improving, and a good monsoon will give further fillip to rural and, therefore, overall consumption in the coming quarters,” Nageswaran said while addressing reporters at a virtual press conference on the latest GDP numbers.
India registered a GDP growth of 6.7 per cent for the quarter ending June 2024.
The CEA said that a slight slowdown in GDP growth was anticipated by many commentators due to the elections, which brought down government spending and capital investment. However, he added that there is a better alignment between the demand and supply side of the economy, with private final consumption expenditure, gross fixed capital formation, and net exports holding up well.
“The Indian economy is sustaining the growth momentum. The private sector is beginning to invest,” Nageswaran said.
The CEA expects the agriculture and allied sectors to see a rebound further into the financial year, with the country experiencing normal rainfall and reservoir storage levels higher than the last ten years’ average. He said that healthy progress in monsoon rainfall and higher kharif sowing (Y-o-Y) bode well for rural demand and agricultural output.
The CEA said that the government has reiterated its fiscal deficit target, bringing it down from 5.1 per cent to 4.9 per cent for FY25, and is on track to meet the 4.5 per cent target for FY26.
He said that the gross value added (GVA) at basic prices, as well as GDP, are putting behind the contraction induced by the COVID pandemic, which affected the growth rates in the first quarters of 2020-21 and 2021-22.
Nageswaran also flagged concerns such as the escalation of geopolitical conflicts, which may lead to supply dislocations, higher commodity prices, reviving inflationary pressures, and stalling monetary policy easing with potential repercussions for capital flows.
The CEA said that we need to make sure that the softening of the consumer confidence index, as households lower their optimism on the employment situation and income, is a temporary phenomenon.
First Published: Aug 30 2024 | 7:46 PM IS