The Finance Ministry in its monthly review has expressed confidence that India’s GDP will grow at a rate of around 6.5% in FY 2025.
The review also highlights the importance of reforming India’s fiscal responsibility framework to achieve the goal of becoming a developed nation by FY 2047-48.
According to the ministry, rural demand remains resilient. This is evident from the 23.2% growth in two-wheeler and three-wheeler sales and a 9.8% growth in domestic tractor sales during October-November 2024.
Urban Demand on the Rise – Finance Ministry
The finance ministry said urban demand is growing, as reflected by a 13.4% year-on-year growth in passenger vehicle sales during October-November 2024. Additionally, domestic air passenger traffic also witnessed strong growth.
As a result, the ministry hoped that the economy would grow at a real rate of around 6.5% in FY25.
GDP growth in the second quarter of the current financial year 2024-25 (July-September) came in at 5.4%, the lowest in seven quarters, compared to 6.7% in the previous quarter.
This makes the projected growth rate for the upcoming quarters crucial to maintain the economic momentum.
EY Report Mirrors FY 2025 Growth Estimate
Yesterday’s EY report also estimated that the Indian economy is likely to grow at 6.5% in both the current and next fiscal year. However, GDP growth for the September quarter fell well short of expectations, registering at just 5.4%. This decline was due to a drop in private consumption expenditure and gross fixed capital formation.
The report said that GDP growth is expected to be 5.4% in the second quarter of FY2024-25, the lowest in seven quarters. Contributing factors include lack of momentum in private investment demand and negative growth in government capital expenditure. Government investment spending declined by 15.4% in the first half of the current financial year.
EY Economy Watch December Forecast Highlights
The EY Economy Watch December 2024 report has projected India’s economic growth rate at 6.5% for FY 2024-25 (April 2024 to March 2025) and FY 2025-26.
The report emphasises the importance of sustainable debt management, eliminating government savings and promoting investment-led growth as key measures to pave the way for transforming India into a developed economy.
DK Srivastava, Chief Policy Advisor, EY India, highlighted that the proposed amendments to the Fiscal Responsibility and Budget Management (FRBM) Act are essential to enable India to sustain growth while maintaining fiscal prudence.
He said these changes will not only address the current challenges but also lay the foundation for India’s development as a developed economy.
Also Read: ED Uncovers Major Human Trafficking Racket: Indian Students Illegally Sent to the US
