Last month, the Reserve Bank of India (RBI) estimated that the GDP growth rate for the fiscal year 2025 would be 7.2%. NITI Aayog member Arvind Virmani stated on Friday, July 12, 2024, that the Indian economy is expected to grow at around 7% in the current fiscal year and will likely maintain a similar growth rate for several years. 

According to Virmani, the Indian economy is facing new challenges that must be addressed.

In an interview with PTI, Virmani mentioned that the Indian economy is anticipated to grow at a rate of 7% plus or minus 0.5%. Virmani expressed confidence that the economy will maintain this growth for several years.

Virmani acknowledged that the Indian economy is recovering, particularly in response to the decrease in private consumption expenditures in the last fiscal year. He attributed this reduction to the impact of the pandemic, which led people to dip into their savings. 

This prompted a shift towards increased savings and reduced current consumption patterns.

Regarding the slowdown in privatisation in states where regional allies are in power, Virmani downplayed the issue, stating that historical examples show that such coalitions may impede privatisation. 

However, he believes privatisation can still proceed in other states, including those with coalition partners in power. He cited historical examples to support his viewpoint.

Additionally, he discussed the decline in foreign direct investments (FDI) in India despite being the fastest-growing economy. Virmani attributed this decline to the higher riskless return on investment in the US and other developed countries compared to emerging markets. 

He anticipates that once interest rates decrease in the US, FDI inflows into emerging markets, including India, will likely increase.

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