The Chief Economic Advisor (CEA) V. Ananth Nageswaran has delivered some encouraging news to the government, stating that despite the country’s Gross Domestic Product (GDP) growth rate dropping to a 15-month low of 6.7% in the April-June quarter of the current financial year, the Indian economy is on track to achieve a growth rate of 6.5-7% for 2024-25. According to data released by the National Statistics Office (NSO), the GDP growth rate fell to 6.7%, primarily due to sluggish agricultural output, which decreased from 3.7% in the April-June quarter of 2023-24 to just 2%.
Anticipated Growth in the Agricultural Sector
Speaking about the agricultural sector, Nageswaran mentioned that very few subdivisions experienced a deficit in the monsoon, with the majority witnessing normal rainfall. He noted that the area under Kharif sowing has increased compared to the previous year. “I believe that as we progress through the financial year, we will see a surge in growth rates in agriculture and associated sectors,” he stated. Furthermore, he emphasized that rural consumption has stabilized and improved, with the favorable monsoon conditions expected to boost rural and overall demand in the upcoming quarters.
Improved Banking Sector Health
The CEA also remarked that, in terms of the economic outlook, the pace of growth remains strong. Initially, there were concerns about a slowdown in the first quarter due to elections and reduced government spending; however, with the good progress of the monsoon and healthy corporate and banking balance sheets, the outlook appears positive. He emphasized that the budget is poised to further enhance growth, particularly focusing on employment, production, skills development, the agriculture sector, MSMEs, and energy security in the medium term.
Projected Growth for the Fiscal Year
Nageswaran indicated that the Indian economy could expect a growth rate of 6.5-7%. Importantly, if the structural reforms implemented over the past decade are further advanced in the coming years, there is potential for sustained growth rates exceeding 7% annually. He expressed confidence that the momentum of growth remains robust and affirmed that a growth rate of 6.5-7% for the current financial year is highly realistic.
Key Takeaways
| Aspect | Current Status | Future Outlook |
|---|---|---|
| GDP Growth Rate | 6.7% (April-June 2023) | Projected 6.5-7% for 2024-25 |
| Agricultural Growth | 2% (decrease from 3.7%) | Expected improvement with better monsoon |
| Banking Sector Health | Good balance sheets | Positive outlook for lending and growth |
| Rural Consumption | Stabilized and improving | Projected increase with good rainfall |
