India's Chief Economic Advisor V. Anantha Nageswaran has provided a positive outlook on the nation’s economic prospects, indicating potential growth supported by several key factors. Speaking on March 1, 2025, Nageswaran forecasted the country's GDP growth for the fiscal year 2024-25 to reach 6.5%, buoyed by recent trends and economic activities.
The Ministry of Statistics released GDP numbers for the third quarter of the financial year, noting, "Real GDP is estimated to grow by 6.2% in Q3 of FY 2024-25." This indicates not only recovery from previous quarters but also sets the stage for optimistic fiscal forecasts. The report revised the growth rate for the second quarter up to 5.6%, following the first quarter’s growth of 6.6%. For the fourth quarter, achieving the predicted 7.6% growth rate will require substantial performance from the economy.
Nageswaran highlighted three pivotal factors driving this optimistic projection for the fourth quarter. Firstly, he pointed to the remarkable performance of India’s exports, especially merchandise exports—excluding petroleum products, gems, and jewelry—which have surged nearly 10% during the April 2024 to January 2025 period. This growth is an encouraging sign of global demand for Indian goods, which can significantly impact overall economic performance.
Secondly, the Chief Economic Advisor remarked on the revival of capital expenditure by the Union government. According to Nageswaran, capital expenditure for the current fiscal has picked up pace, with almost 75% spent by the end of January 2025. He noted, "After an initial slow start due to the elections, capex has picked up significantly..." This recovering investment sentiment is key to driving infrastructure and industrial growth.
Thirdly, the massive financial influx associated with the upcoming Maha Kumbh religious gathering has been significant. Nageswaran observed extensive spending patterns from millions of participants, tracking close to 50 to 60 crore attendees. This large-scale gathering is projected to substantially contribute to GDP, indicative of high consumer spending.
While these elements paint a bright picture, uncertainties still loom over the economy, particularly concerning the recent volatility within the Indian equity markets. Following speculations of retaliatory tariff measures, the market faced its most severe crash since the post-COVID recovery began. On the same day as Nageswaran’s address, Indian stock indices plummeted nearly 2% amid fears of increased trade barriers, particularly from the U.S.
Resolute, Nageswaran assured stakeholders, stating, "Looking at the long-term prospects of the Indian economy, compared with the other places... one should not over-interpret the near-term volatility." He framed the concerns surrounding potential tariffs as largely speculative, indicating they could be mitigated by favorable factors such as decreasing crude oil prices, which could cushion any adverse impacts.
During the media briefing, he commented, "Reciprocal tariff impact is speculative at the moment..." His statements hinted toward a cautious optimism, especially in light of India's diplomatic efforts to negotiate trade agreements with the United States, following recent high-level meetings.
Nageswaran remained hopeful about external factors, noting, "A possible end to the war going on in Ukraine and more crude supply coming to the market could ease oil prices..." He suggested these elements would help alleviate the pressures of any trade-related issues, reflecting the interconnected nature of global economics.
Given the broader economic fundamentals within India, alongside external circumstances, Nageswaran underscored resilience, concluding his remarks on the economy's pathways forward. He reiterated, "The GDP data released today augurs well for the growth outlook for FY26 and beyond." His comments encapsulated the essence of the economic picture—while near-term challenges exist, the fundamentals driving India’s growth remain strong.
Overall, the discourse led by Nageswaran presents a balanced view of optimism tempered by caution, recognizing the importance of continued economic management to safeguard against global trade uncertainties. Moving forward, the combination of bolstered exports, governmental expenditure, and strong consumer spending may play pivotal roles as India navigates its economic course through 2025 and beyond.