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Informist, Friday, May 30, 2025

 

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--CEA: Not right to say trade uncertainty would cast shadow on growth 
--CEA: India to surpass Japan as 4th largest econ in FY26 
--CEA: Too early to estimate contribution of income tax cut in GDP growth 
--CEA: Retain FY26 growth outlook of 6.3-6.8% 
--CEA: Fiscal policy stance stimulating econ, to help lower credit cost 
--CEA: Diverging central banks' rate paths globally may affect capital flows 
--CONTEXT: CEA Nageswaran breifing media after GDP data release 
--CEA: Econ momentum picked up in Jan-Mar, keeping up in FY26

 

NEW DELHI – India's economic momentum, which picked up considerably in Jan-Mar, is keeping up in the current fiscal year as well, Chief Economic Adviser to the Government V. Anantha Nageswaran said Friday after the National Statistical Office released the GDP growth for Jan-Mar and the financial year 2024-25 (Apr-Mar). India's GDP grew 7.4% in Jan-Mar after registering sub-7% growth in the previous three quarters.

 

Based on the economy's performance so far, the finance ministry retains its growth outlook of 6.3-6.8% for FY26, Nageswaran said. The economy is likely to get support from the income-tax cut announced in the Budget for FY26 and the policy repo rate cuts by the Reserve Bnak of India, the economist added. The RBI has already cut the policy repo rate by 50 basis points in 2025, and there are expectations of further cuts adding up to another 50 bps this year.

 

The government had in the Budget for FY26 announced tax exemption on income up to INR 1.2 million per annum. The cut in tax will drive demand in the economy and boost growth, but it is still too early to estimate how much the contribution would be, Nageswaran said.

 

The government's fiscal stance to lower the deficit and the debt-to-GDP ratio has also been stimulating the economy by reducing the cost of credit, the chief economic adviser said. With such economic momentum, India would surpass Japan in FY26 to become the fourth largest economy in the world, according to Nageswaran.

 

While the economy may face some challenges where growth in exports is concerned, it would not be correct to say the global trade uncertainty would cast a shadow on domestic growth, he said. Strong domestic demand would compensate for dwindling exports in FY26, he said.

 

"Diverging central bank rate paths globally may impact capital flows and financial markets," Nageswaran said. While most central banks have been cutting their policy rates, Banco Central do Brasil raised its selic rate this month, and some central banks, including the US Federal Reserve and the Bank of Japan, have maintained status quo.  End

 

Reported by Krity Ambey

Edited by Rajeev Pai

 

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