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Informist, Wednesday, Mar. 26, 2025

 

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--Fin min: High-frequency data suggest improved growth momentum in Jan-Mar 
--Fin min: Industry must recognise mutual endogeneity of investment, demand 
--Fin min: Economy seems on track to achieve GDP growth of 6.5% in FY25 
--Fin min: Investment by pvt cos would overpower risk to India growth outlook 
--Fin min: Trade deficit likely to rise going ahead due to export uncertainty 
--Fin min: Geopolitical tensions also pose significant risk to growth outlook 
--Fin min: Rising trade policy uncertainty significant risk to growth outlook

 

NEW DELHI - The finance ministry Wednesday called on the private sector companies to invest, banking on the Indian economy's resilience and its steady growth outlook. Private sector investment into the economy would overpower the risks to India's growth outlook considerably, the finance ministry said in its Monthly Economic Review report for February. 

 

India's economic growth outook for 2025-26 (Apr-Mar) faces risks from geopolitical tensions, increasing uncertainty around trade policies, volatility in international commodity prices and the financial markets, the ministry said. The government's Economic Survey has projected India's real GDP growth at 6.3-6.8% for FY26, while the Reserve Bank of India forecasts it at 6.7%. 

 

"It is essential that the industry recognises the mutual endogeneity of its investment spending and consumption demand," the ministry said.

 

Economic growth has slowed down in FY25 from the 9.2% seen in FY24 due to slower government capital spending and a slowdown in urban consumption. The government's second advance estimate has projected this year's GDP growth at 6.5%, and the ministry Wednesday said that the economy seems on track to achieve this growth.

 

High-frequency indicators of economic activity suggest growth momentum improved in Jan-Mar, the ministry said. "The growth in Q4 (Jan-Mar) of FY25 is likely driven by improved export growth, pick-up in government capital expenditure post-elections and impetus to economic activity associated with Kumbh Mela."

 

Government capital expenditure has been the key driver of economic growth since the COVID-19 pandemic, while private investment has lagged due to uncertain consumption demand. Now, domestic private sector capital formation will be an important driver of economic growth, the ministry said. "Supportive fiscal measures, accommodative monetary policy, and the Union Budget's focus on longer-term development drivers and reform will bolster domestic economic resilience amidst significant global uncertainties."

 

The ministry said that the expectation of record production of food grains will help moderate food inflation in the coming months. CPI inflation fell to a seven-month low of 3.61% in February, and is expected to remain around the RBI's 4% target throughout 2025.  End

 

Reported by Shubham Rana

Edited by Vandana Hingorani

 

 

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