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Informist, Friday, Feb. 28, 2025

 

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--CEA: See 7.6?on growth in Jan-Mar on robust govt capex, good tourism 
--CEA: Indian econ needs to grow 7.6% in Jan-Mar to meet FY25 GDP growth aim 
--CEA: Improving urban demand, resilient rural demand to aid FY25 GDP growth 
--CEA: Mahakumbh tourism may have sizeable impact on Jan-Mar consumption 
--CONTEXT: CEA's comments at media briefing post GDP growth data for Oct-Dec 

 

NEW DELHI – India's GDP can certainly grow 7.6% in Jan-Mar, which is the implied growth rate needed to meet the GDP expansion target for 2024-25 (Apr-Mar), on account of the recent boost in tourism due to the Mahakumbh Mela, and strong capital expenditure by the government, Chief Economic Adviser to the government V. Anantha Nageswaran said on Friday.

 

The statistics ministry on Friday revised its GDP growth estimate for FY25 to 6.5% from the earlier pegged 6.4% and released data showing that the Indian economy grew 6.2% in Oct-Dec. Post this, analysts expressed skepticism over achieving an economic growth of 7.6% in the last quarter of the year, terming it "unrealistic".

 

However, Nageswaran, while addressing a media briefing after the release of the GDP data for Oct-Dec, said that a growth rate of 7.6% in Jan-Mar "doesn't look that unrealistic", and gave three reasons for his confidence—boost in tourism, pick-up in government's capital expenditure, and the good performance in non-petroleum and non-gem and jewellery exports. 

 

"A dimension that makes 7.6% (growth in Jan-Mar) realistic is huge spending that happened in January, spilling into February, associated with the Mahakumbh," Nageswaran said. "A huge population of 500-600 million people have visited. This can add to GDP quite significantly from the expenditure side." Mahakumbh Mela, which ended on Wednesday, is a a Hindu pilgrimage that is celebrated every six to 12 years in Prayagraj. 

 

Tourism, on account of the pilgrimage, is likely to have a sizeable impact on the private final consumption in Jan-Mar, the economist said without giving an expected estimate. India's private final consumption has grown 6.8% in Apr-Dec. 

 

Besides the boost from tourism, the pick-up in government's capital expenditure is likely to bode well for the economic activity in Jan-Mar. "The government capex after the initial slow start has really picked up steam," the CEA said. 

 

The government's capital spending had slowd down in the initial months of the current financial year due to election-related restrictions. In Apr-Jan, the government's capital expenditure rose 5% to INR 7.57 trillion.  

 

The CEA also attributed India's good performance in non-petroleum and non-gem and jewellery exports to be a reason for the 7.6% growth in Jan-Mar. While India's total merchandise exports grew only 1.4% in Apr-Jan, the non-petroleum and non-gem and jewellerey exports were up 9.7% at $281.46 billion in the first 10 months of the ongoing financial year. 

 

Going ahead, the Indian economy is likely to get significant support from strong urban demand and resillient rural demand as well, the CEA said. "So in that sense, the implied fourth quarter quarter GDP growth numer of 7.6% doesn't look that unrealistic."  End

 

 

US$1 = INR 87.50

 

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

 

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