Economic Survey 2024-25 Puts India's Growth In Slow Lane To 6.3-6.8 Pc In FY26

(MENAFN- KNN India) New Delhi, Jan 31 (KNN) India's economic growth is expected to moderate to 6.3-6.8 percent in fiscal year 2025-26, according to the Economic Survey 2024-25 presented by Finance Minister Nirmala Sitharaman.

This forecast represents a notable slowdown from the robust 8.2 percent growth achieved in FY24, marking what would be the country's slowest pace of expansion in four years.

The survey highlights that while India's economic fundamentals remain strong, with stable private consumption and a solid external account, the nation faces challenges in achieving its ambitious development goals.

To realise its vision of becoming a developed nation (Viksit Bharat) by its centenary of independence, India needs to sustain an average growth rate of approximately 8 percent at constant prices for the next one to two decades.

Global economic conditions continue to influence India's growth trajectory. While inflationary pressures have been easing worldwide, potential geopolitical disruptions, including tensions in the Middle East and the ongoing Russia-Ukraine conflict, pose risks.

Central banks globally have adopted more accommodative monetary policies, though the pace of rate adjustments varies by region.

Investment activity shows promising signs, with manufacturing capacity utilisation exceeding long-term averages and private sector order books displaying steady growth.

However, the survey cautions that global excess capacity in sectors such as steel could lead to aggressive trade policies that might temper these gains.

Recent economic indicators have raised concerns about the sustainability of India's growth momentum. The economy experienced a significant slowdown in the second quarter of FY25, recording growth of 5.4 percent, down from 8.1 percent in the same period last year.

This deceleration has been attributed to reduced business spending, cautious consumer behaviour amid high inflation, and declining corporate profits.

While India's projected growth rate remains impressive by global standards, it falls short of the levels needed to achieve Prime Minister Modi's vision of a developed India by 2047.

Major financial institutions maintain conservative outlooks, with the International Monetary Fund projecting average growth of 6.5 percent in the coming years, while the World Bank estimates 6.7 percent. Goldman Sachs forecasts even more modest growth of 6.3 percent for FY26.

(KNN Bureau)

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