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Despite global uncertainties, India's economic momentum is expected to remain strong, driven by robust rural demand and a revival in urban consumption, according to Chief Economic Adviser V Anantha Nageswaran.
During a briefing on the Q3 GDP numbers, Nageswaran expressed optimism about India's medium-term economic prospects. He cited strong rural demand, recovering urban consumption, robust kharif production, and better rabi sowing as positive indicators for output growth. The country's economic growth rose to 6.2% in the third quarter of FY25, up from 5.4% in the previous quarter In terms of challenges, Nageswaran noted that inflation, sluggish export growth, stock market volatility, a strong US dollar, and rising Japanese interest rates could put pressure on capital flows. However, he believes that these challenges will have a greater impact on financial markets than the real economy. He cited strong rural demand, recovering urban consumption, robust kharif production, and better rabi sowing as positive indicators for output growth. "Despite these uncertainties, which are likely to persist for some time, India's economic momentum is expected to sustain. Strong rural demand, recovering urban consumption, robust kharif production, and better rabi sowing--supported by higher reservoir levels--are positive indicators for output growth. Additionally, the primary sector's growth is expected to surpass previous years," Nageswaran said. The union budget's emphasis on agriculture, MSMEs, investment, and exports, along with tax cuts that boost middle-class purchasing power, is expected to further support medium-term economic growth. Nageswaran emphasised that the sustainability of this growth rate will be strengthened if the private sector ramps up investments, focusing on India's stability and growth potential rather than global uncertainties. "The sustainability of this growth rate will be further strengthened if the private sector ramps up investments. Instead of being influenced by global uncertainties, businesses should focus on the stability and growth potential of the Indian economy," he added. The near-term global economic outlook is shaped by the trade policies of major economies amid slowing disinflation. These policies could fuel inflation, tighten financial conditions, and increase market volatility. A strong US dollar and rising Japanese interest rates could accelerate capital outflows from emerging markets, raise risk premiums, and heighten external risks. Commenting on the economic impact of Mahakumbh, the CEA said that increased private expenditure on travel, food, and accommodation--driven by the large number of visitors to Prayagraj for the holy dip at Triveni Sangam--will significantly boost consumption expenditure in Q4. (ANI)
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