Indian Economy May Grow Between 6.5% And 7% In Fiscal 2025: Finance Ministry

The Indian economy is likely to grow between 6.5% and 7% in the current financial year, the Department of Economic Affairs stated in its monthly bulletin.

The outlook for the Indian economy is good, underpinned by a stable external sector, positive agricultural outlook, expected improvements in demand supported by the festive season, and the likelihood of an increase in government spending, which will boost investment activity, it stated.

However, at the margin, demand conditions in the economy bear watching, the bulletin said.

In comparison, the Indian central bank has retained its GDP growth forecast at 7.2% for fiscal 2025.

Other highlights:

• Rural demand continues to strengthen in the first half of fiscal 2025.

• Contrary to rural demand, there has been evidence of a slowdown in urban demand as reflected in the performance of various indicators during the first half of financial year 2024-2025.

• Urban demand appears to moderate due to softening consumer sentiment, limited footfall due to above-normal rainfall, and seasonal periods during which people tend to refrain from new purchases.

• The services sector seems to have maintained its role as a key growth driver in second quarter of fiscal 2025 despite a slight moderation in pace.

• Given the overall subdued inflation, barring a few food items, the real price of money may have gone up.

• After two months of low inflation, consumer price inflation rose in September, primarily driven by the effects of the erratic monsoon on a few vegetable supplies. Going ahead, sufficient food grain buffer stock and optimism for a healthy kharif harvest will likely alleviate price pressures.

• Risks stem from global factors such as geopolitical conflicts, rising geo-economic fragmentation, uncertainties about the trade policies of major economies and consequent financial market reactions.