Indian economy to grow at 6.5-7% in FY 2024-25, says CEA Nageswaran

The Indian economy is expected to grow at a rate of 6.5-7 per cent in the current financial year on a steady state basis, the chief economic advisor to the government, V Anantha Nageswaran, said on Friday (September 27).

Speaking virtually at an event organised by the Bengal Chamber of Commerce and Industry, Nageswaran said that while the economy will grow at 6.5 per cent in real terms, the nominal rate of growth will be 11 per cent, taking inflation into account.

"The Indian economy is poised to remain the fastest growing in the current financial year with a growth rate of 6.5-7 per cent on a steady state basis,” he said. “This is a very good achievement in the current global context."

Post-COVID growth

He said that while the world was faced with medium-term uncertainties with global trade slowing to a crawl, post-COVID recovery in India was helped by the government’s calibrated fiscal and monetary policies.

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“Post-COVID recovery in India is cemented due to prudent macro-economic management which laid the foundation of economic growth with stability,” he said.

Nageswaran said that there was no vulnerability in the current account balance of the country with domestic financial markets and the banking system in good health.

Credit system upgrade

“The macro indicators signal stability. There has been a massive shift in capital expenditure, declining external debt to GDP ratio and lower retail inflation.”

He said all of these warrant a credit system upgrade of the country, adding that the supply side capability of the economy had been boosted. This had helped in keeping inflation on the leash.

“All these will help maintain a steady growth rate over the next several years. And India needs to find domestic sources of growth,” he said.

Ensure food security

India needs to generate productive employment, ensure food security, ease regulatory bottlenecks for the MSMEs and ensure efficient financial resource allocation, he added.

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Nageswaran said the MSME sector was the key to non-farm job creation. Also, the small and medium firms need to graduate into large enterprises to absorb more labour.

He also called for greater participation of women in the workforce. For this, safety and security in workplaces needed to be ensured.

AI can displace labour

Nageswaran, however, warned that artificial intelligence (AI) might end up displacing labour.

“An appropriate balance has to be struck between technology and labour keeping the social responsibilities in mind,” he pointed out.

(With agency inputs)