Union Budget 2024: India poised to register 7% economic growth in FY25
New Delhi: Two days before Finance Minister Nirmala Sitharaman tables the Union Budget for 2024-24 in Parliament on February 1, her ministry expected India’s economy to grow around 7 percent in the next fiscal year, despite new geopolitical risks emerging from the Red Sea crisis that could affect supply chains, global inflation and economic output.
The growth estimates came days before Prime Minister Narendra Modi’s government presents its last budget before India heads to a General Election to the Lok Sabha in April-May this summer.
In the government’s latest economic review made public on Monday, Chief Economic Adviser V. Anantha Nageswaran’s team said India’s growth will outpace the global economy in the next fiscal year that starts from April 1, 2024, supported by stable domestic demand and private investment.
“Recent events in the Red Sea may have brought back concerns over reliance on global supply chains, further aggravating the slower growth in global trade in 2023,” it said.
If supply chain disruptions in 2024 persist, it could impact trade flows, transportation costs, economic output, and inflation worldwide, it said, adding that India is “quietly confident of weathering the emerging disturbances.”
The latest growth projection compares with the first advance estimates, where the economy was projected to expand 7.3 percent in the current fiscal year, after post-COVID recovery growth of 8.7 percent in 2021-22 and 7.2 percent in 2022-23.
“The robustness seen in domestic demand, namely, private consumption and investment, traces its origin to the reforms and measures implemented by the government over the last 10 years,” the review said.
Earlier, S&P Global Ratings predicted that India will remain the fastest-growing major economy for the next three years, putting it on track to become the world’s third-largest economy by 2030, overtaking Japan and Germany.
Strength in the financial sector and recent and future structural reforms will make it “eminently possible” for the Indian economy to grow above 7 percent in the coming years, the review said.
India expects headline retail inflation to gradually slow, the review added but did not specify a time frame. Annual retail inflation rose to 5.69 percent in December 2023 from 5.55 percent in the previous month.