India's chief economic advisor nudges agencies to reappraise India's GDP growth closer to 7%

India's Chief Economic Advisor (CEA) V Anantha Nageswaran has prompted various agencies to reassess their projections for India's Gross Domestic Product (GDP) growth, advocating for figures closer to 7% or higher for the fiscal year 2025.

Citing optimistic forecasts from the Reserve Bank of India (RBI) for the fiscal year 2025, Nageswaran emphasised the need for a reassessment in light of potential growth prospects.

Nageswaran underscored the significance of rural income improvements in the upcoming fiscal year, predicated on favourable agricultural conditions. He highlighted the impact of a normal monsoon and robust Kharif and Rabi crop yields on the anticipated growth trajectory.

"There is a case for many agencies to reappraise their estimates of potential GDP growth in India to closer to 7% if not above," said Nageswaran. "And let’s also remember that the RBI is projecting 7% GDP growth for FY25 as well."

Nageswaran's remarks come against the backdrop of modest agricultural growth during the first nine months of fiscal year 2024, attributed to erratic monsoon patterns. While Kharif harvests recorded lower yields, the CEA expressed optimism regarding the promising Rabi sowing figures.

"Agri growth for the first 9 months in FY24 has been somewhat lacklustre because of an erratic monsoon, kharif harvest is on the lower side, but the good news is that the Rabi sowing has been quite good compared to last year," noted Nageswaran. "Predictions of withdrawal of El Niño also make the case for a normal monsoon in the next financial year as well as good harvests for both Kharif and Rabi crops next year."

Anticipating a rebound in the agricultural sector's value-added contributions in FY25, Nageswaran emphasised the ripple effect on rural incomes, projecting a positive trajectory for economic growth in tandem with agricultural prosperity.

Nageswaran's call for a reassessment of GDP growth estimates signals a potential shift in economic outlook, with emphasis on the agricultural sector's pivotal role in shaping India's economic landscape in the coming fiscal year.

Meanwhile, in its latest report released on Monday, March 4, Moody’s said with the waning of global headwinds, it forecasts around 6.8% growth in the calendar year 2024, followed by 6.4% in 2025.