EY projects India’s GDP growth at 6.5% in FY25, FY26

Real gross domestic product (GDP) growth eased to a seven-quarter low of 5.4 per cent in Q2 FY25 after a 6.7-per cent growth in the preceding quarter.

India’s economy is expected to grow by 6.5 per cent in the current and the next fiscal, according to a recent EY report, which attributed lower-than-anticipated expansion in Q2 FY25 to a drop in private consumption expenditure and gross fixed capital formation.
It also highlights the importance of reforming India’s fiscal responsibility framework to achieve the Viksit Bharat vision by fiscal FY48.

“One outstanding feature of demand is the slowdown in investment, as reflected in the growth of gross fixed capital formation. This growth is estimated at 5.4 per cent in 2Q FY25, which is a six-quarter low. Apart from the fact that private investment demand has not picked up, there was a contraction in government of India’s investment expenditure growth, which has remained negative at minus 15.4 per cent in first half of FY25,” the report said.

It continued to be negative even in October 2024 at minus 8.4 per cent, implying that in the first seven months government’s investment expenditure growth has remained negative at minus 14.7 per cent.

The EY report also highlights the importance of reforming India’s fiscal responsibility framework to achieve the Viksit Bharat vision by fiscal 2047-48. A recalibrated approach is vital for sustainable debt management, eliminating government dissavings, and driving investment-led growth, paving the way for India’s transformation into a developed economy, it added.

Fibre2Fashion News Desk (DS)