New Delhi
The Asian Development Bank (ADB) has projected India’s economic growth to remain strong, saying that the gross domestic product (GDP) will grow by 7.0 percent in the financial year ending March 31, 2025 and by 7.2 percent in the next financial year. Expected to happen.
These estimates have been made in ADB’s Asian Development Outlook for September 2024. This estimate is in line with ADB’s earlier estimate. ADB Country Director for India Mio Oka said, “India’s economy has shown remarkable resilience in the face of global geopolitical challenges and is poised for stable growth. “Agrarian reforms will boost rural spending, which will complement the effects of strong performance of the industry and service sectors.”
The report highlights that an above average monsoon in most parts of the country will lead to strong agricultural growth, which will boost the rural economy in the current financial year. It maintains a positive outlook for industry and services sectors, private investment and urban consumption for the current fiscal year and the next fiscal year. Additionally, a new government policy offering employment-linked incentives to workers and firms could boost labor demand and support job creation starting from the next fiscal year.
With the government’s fiscal consolidation efforts, central government debt is estimated to decline from 58.2 percent of GDP in the last fiscal year to 56.8 percent in the current fiscal year. The general government deficit, which includes state governments, is expected to remain below 8 percent of GDP in the current fiscal year.
Despite higher agricultural output expectations, consumer inflation is estimated to rise to 4.7 percent in the current fiscal year due to rising food prices. This has prevented India’s central bank from adopting a more accommodative monetary policy. If improved agricultural supplies moderate the rise in food prices, the central bank may start reducing policy rates in the current fiscal year, thereby enhancing the prospects for credit expansion.
It said India’s current account deficit is estimated to be 1.0 per cent of GDP in the current fiscal year and 1.2 per cent in the next fiscal year, down from 1.7 per cent for both the years due to better exports, lower imports and stronger remittance inflows. is lower than the previous forecast.
Near-term growth risks include geopolitical shocks that could disrupt global supply chains and commodity prices, as well as weather-related risks to agricultural production. This approach is based on the central government achieving its capital expenditure target in the current financial year.
These risks could be offset by higher foreign direct investment, which could support growth and investment, particularly in manufacturing. Additionally, improvements in the supply of agricultural products could lead to lower food prices, potentially resulting in lower than forecast consumer inflation.
