The Indian economy is expected to achieve a growth rate of 6.5–7% in the current financial year, despite the growth in the gross domestic product slowing to a 15-month low of 6.7% in the June quarter, Chief Economic Adviser V Anantha Nageswaran said on Friday.
Data from the National Statistical Office revealed that the GDP growth fell to 6.7% in the first quarter, primarily due to a deceleration in farm production, which decreased to 2% from 3.7% in the same period last year.
While there are a few areas with deficient monsoon, most regions have received normal rainfall, and kharif sowing is higher compared to the previous year. A rebound in agriculture and allied sectors as the fiscal progresses is expected, Nageswaran said.
Rural consumption has stabilised and improved, and a favourable monsoon is expected to further boost rural and overall consumption in the upcoming quarters.
Looking ahead, Nageswaran said the growth momentum remains robust. The slowdown in the first quarter was anticipated due to election-related factors and a reduction in government spending. He also mentioned that the budget supports this momentum by focusing on employment generation, skill development, agriculture, the MSME sector, and energy security.
Nageswaran expressed confidence that the Indian economy can achieve a growth rate of 6.5–7% this year, with the potential for sustained growth above 7% if structural reforms from the past decade are further advanced.
Regarding risk factors, he pointed out that global financial markets remain elevated and volatile due to ongoing political developments, which could impact sentiment and private consumption. He also noted a slight uptick in inflation expectations, though they remain below last year's levels, according to an outsourced survey by the RBI.
(With text inputs from PTI)
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