Chief Economic Advisor (CEA) Dr V Anantha Nageswaran has expressed confidence that India will meet the Economic Survey’s estimated growth target of 6.5% to 7% for the fiscal year 2024–2025.

India’s GDP grew by a startling 5.4% in Q2, the lowest since Q3 of FY23. Nageswaran recognized the slowdown in the second quarter of the fiscal year during a briefing on Thursday, 12 December, but he emphasized that the figures are likely to be revised upward as more data becomes available and that the slowdown is not just a data artefact.

“We will be on track to achieve the numbers we had pencilled in the Economic Survey somewhere between 6.5% and 7%,” Nageswaran said, noting that the slowdown in Q2 might have been caused by a number of causes. Seasonal elements that may have temporarily affected economic activity include September’s religious observances and severe rainfall.

He did, however, add that there might be more basic problems at work, such as the government’s capacity to spend as planned and the continued dynamics in the private sector following COVID, especially with regard to patterns in employment and pay.

“While it could be something as simple as a seasonal factor, there may also be more significant structural changes at work, especially in terms of household income, consumption, and savings patterns post-COVID,” Nageswaran said.

“At this stage, we are not necessarily ruling out any factors; they could be temporary or mundane, or they could be more serious, but I remain confident that we will be on track to meet our target.”

Nageswaran emphasized the encouraging trends in the private sector, pointing out that companies are starting to use capital much more quickly thanks to improved balance sheets.

He was pleased with the economy’s increasing capital formation, which had risen from 27.3% of GDP before COVID to 30.8% of GDP. He noted that government-led public investment programs have been a major factor in the rise in capital formation.

The CEA recently said that corporate hiring practices should be examined because wage growth for contract workers across many industries has not kept pace with inflation.

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