India on track for 7% GDP growth in medium-term: CEA

Bengaluru: India’s Chief Economic Advisor V Anantha Nageswaran, on Friday, expressed confidence that the Indian economy can grow by 6.5-7 per cent and 7 per cent over the medium-term on a sustainable basis, in spite of April-June quarter gross domestic product (GDP) growth coming in at a five-quarter low of 6.7 per cent.

"The growth momentum remains strong. The first quarter slowdown was anticipated due to the election and due to slowdown in government spending. There is healthy progress in monsoon, corporate and bank balance sheets are in good shape,” Nageswaran said during a virtual media briefing after the release of official GDP data.

GDP growth in the first quarter of FY25 is sharply down when compared with the 8.2 per cent expansion recorded in Q1FY24. It is also below the January-March quarter’s 7.8 per cent and the Reserve Bank of India’s prediction of 7.1 per cent.

“In the medium term, the Indian economy can grow at a rate of 7 per cent plus on a sustained basis if we can build on the structural reforms undertaken over the last decade,” Nageswaran said.

Nageswaran said that rural consumption has stabilised and improved and that a healthy progress in monsoon rainfall and higher kharif sowing year-on-year bode well for rural demand and agriculture output.

"I think, the agriculture and allied sectors will see a rebound in their growth rates as we head further into the financial year," he said.

He exuded confidence that growth momentum remains strong and 6.5-7 per cent growth is very realistic for the current fiscal.

Talking about risk factors, Nageswaran said financial markets globally still remain elevated and volatile in the light of political development that might still unfold in other parts of the world, and therefore, potential financial market correction can have implications for sentiment and therefore, on private consumption.

Stressing that inflation expectations have inched upside slightly again, he said, it may be reflecting transient factors, but overall, the inflation remains.

Expectations remain below last year's levels based on an outsourced inflation expectations survey of the RBI, he added.