Finance Ministry Projects 6.5% GDP Growth Despite Global Challenges

(MENAFN- KNN India) New Delhi, Mar 27 (KNN) In a comprehensive monthly economic review, India's Finance Ministry projected an accelerated economic growth trajectory for the January-March quarter of the current financial year, signaling a robust recovery after previous sluggish periods.

The ministry highlighted multiple factors contributing to this potential economic momentum, including improved export growth, increased government capital expenditure, and economic activities associated with the Kumbh Mela.

High-frequency economic indicators substantiate the optimistic outlook, with e-way bills showing double-digit growth and Purchasing Managers' Index (PMI) remaining in the expansionary zone.

After experiencing a seven-quarter low of 5.6% growth in the July-September period, India's gross domestic product (GDP) demonstrated resilience by improving to 6.2% in the subsequent quarter, driven by strong agricultural and service sector performance.

The Finance Ministry estimates the Indian economy will achieve a 6.5% growth in the financial year ending March 2025, despite significant external challenges.

However, the report also cautioned about potential risks, including trade policy uncertainties, volatile international commodity prices, and financial market fluctuations that could impact the economic growth outlook for the upcoming financial year.

Emphasising the critical role of private sector investments, the ministry stressed the importance of recognising the interdependence between investment spending and consumption demand.

The report noted potential positive influences such as proposed changes in personal income tax structures, which are expected to enhance middle-class disposable incomes, and the recent 25-basis point policy rate cut that could further stimulate economic growth.

On the inflation front, the ministry expressed optimism about moderating food inflation, citing expectations of record food grain production in 2024-25.

Recent months have already witnessed easing inflationary pressures, with headline retail inflation declining to a seven-month low in February 2025.

The report also provided insights into recent stock market fluctuations, attributing the decline to factors including profit-taking and reallocation by foreign portfolio investors.

Notably, robust external debt market inflows, partially catalysed by India's inclusion in the Bloomberg Emerging Market Local Currency index, and continued faith from retail investors have helped mitigate the market's volatility.

(KNN Bureau)

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