New Delhi: A significant pick up in the government capex and additional expenditure linked to Maha Kumbh congregation are expected to push the fourth quarter GDP growth to 7.6 per cent, required to achieve an overall economic expansion of 6.5 per cent in the current fiscal, Chief Economic Adviser V Anantha Nageswaran said on Friday.
Briefing media on the third quarter GDP number, he said the data released by the National Statistics Office (NSO) augurs well, and the upwardly revised 6.5 per cent GDP estimate for the current financial year is realistic.
During the third quarter ended December 2024, India’s economic growth rate decelerated to 6.2 per cent against 9.5 per cent a year ago, mainly due to poor performance by mining, manufacturing and all other sectors, except agriculture.
NSO also released the second advance estimate for the current fiscal and pegged the economic growth at 6.5 per cent against 6.4 per cent estimated in the first advance estimate released in January.
To achieve 6.5 per cent growth, India’s GDP has to grow at 7.6 per cent in the fourth quarter, which, according to experts, is optimistic.
Nageswaran noted that 7.6 per cent growth is realistic and can be achieved during the fourth quarter.
“There are some good developments, such as a very significant pickup in government capex and the additional expenditure that we are seeing happening because of the footfalls in Maha Kumbh...that we have been seeing,” he said.
Amidst external negative factors, he said, there are incremental positive factors, making a good case for implied growth of 7.6 per cent being attained in the fourth quarter.
Asked about the stock market fall, he said looking at the long-term prospects of the Indian economy compared to other places and looking at the historical track record of the Indian market, one shouldn’t be over-interpreting the near-term numbers.
Benchmark indices Sensex and Nifty tumbled nearly 2 per cent on Friday, mirroring deep losses in global markets as the latest announcement of an additional 10 per cent tariff on Chinese products rattled investors.
He also said that the Indian economy is on the verge of crossing $4 trillion in FY25.
Nominal GDP or GDP at current prices is estimated to attain a level of Rs 331.03 lakh crore in the year 2024-25, against Rs 301.23 lakh crore in 2023-24, showing a growth rate of 9.9 per cent.
About inflation, Nageswaran said, it is trending down.
He further said that the near-term global economic outlook is influenced by the trade policies of major economies amid a slowing disinflation.
Despite the uncertain global outlook, he said, India’s economic momentum is expected to be sustained, driven by strong rural demand and a revival in urban consumption.
The robust kharif production and better rabi sowing, coupled with higher reservoir levels and seasonal winter correction in vegetable prices, augur well for food inflation going forward, he said.
The Union Budget’s emphasis on agriculture, MSMEs, investment, and exports is likely to enhance India’s medium-term economic prospects, he added.