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Informist, Thursday, May 29, 2025

 

--CEA: 'Less unfavorable' monetary policy for growth this year 

--CONTEXT: CEA Nageswaran speaking at CII's Annual Business Summit 

--CEA: India economy to be over $5-tln by FY28, IMF also agrees

 

NEW DELHI – Chief Economic Adviser to the government V. Anantha Nageswaran believes that the "less unfavorable" monetary policy this year is set to help India's economy expand at a pace similar to the one that he estimated in the Economic Survey released Jan. 31. The income-tax cut announced in the Union Budget for 2025-26 (Apr-Mar), and expectations of a good monsoon this year are likely to help sustain the growth rate pencilled in the survey, Nageswaran said on Thursday.

 

In the Economic Survey for FY25, the economist had projected the GDP growth for FY26 to be between 6.3% and 6.8%. He had also expressed optimism on multiple occasions that the growth is likely to be closer to the upper end of the range.

 

Regardless of how the US tariffs play out, it is quite possible that the Indian economy will grow at a strong pace, Nageswaran said at the Annual Business Summit organised by the Confederation of Indian Industry. "More importantly, the monetary policy has become less unfavorable to growth this year compared to the setting we had in 2024."

 

The Reserve Bank of India has already cut the policy repo rate by 50 basis points in 2025, bringing the repo rate to 6.0% from a high of 6.5% in 2024. There are also expectation of another 50 bps cut this year.

 

The RBI has projected GDP growth of 6.5% in current fiscal for the Indian economy, which is close to the size of $4 trillion. Nageswaran said he expects the economy's size to even cross the $5-trillion mark by FY28, adding that the International Monetary Fund also shared the same view. In fact, by FY31, the Indian economy's size would be over $6.8 trillion, he said.

 

When Prime Minister Narendra Modi-led government returned to power in 2019, it had set a target of $5 trillion for the Indian economy by 2025. The government had formed a working group to develop a roadmap to achieve the target.    

 

In February, Nageswaran had said, "the nominal GDP estimate for FY25, which happens to be around INR 331 trillion, roughly translates into, based on daily average estimate for the exchange rate of INR 84.37 that we have for FY25 up to Feb 27, $3.924 trillion, which is quite close to the $4 trillion for FY25."

 

The statistics ministry, in the second advance estimate, had estimated a nominal GDP growth of 9.9% in FY25. India's nominal GDP grew 9.3% in Apr-Dec, according to the data released February.  End

 

US$1 = INR 85.47

 

Reported by Krity Ambey

Edited by Tanima Banerjee

 

 

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