Chief Economic Adviser V Anantha Nageswaran said on Thursday that economic activity in certain sectors had picked up pace during October-November, making a GDP growth of 6.5-7 percent in the current fiscal year feasible.
He also noted that the 5.4 percent second-quarter GDP growth estimate could be revised upwards, as the current figures are not seasonally adjusted. Nageswaran stressed that despite the dip in growth, the underlying economic story remains strong.
"I think in reacting to these numbers, we shouldn’t throw the baby out with the bathwater. The underlying growth story is still very much intact," Nageswaran said. India’s GDP growth slowed to a seven-quarter low of 5.4 percent in the July-September quarter, down from 6.7 percent in the April-June quarter.
Nageswaran attributed the slowdown to various factors, including "religious observances" in September, excess monsoon rainfall, and potential long-standing issues that are starting to surface. He added that the second-quarter GDP estimate is preliminary and could be revised higher as more data is made available.
The Chief Economic Adviser mentioned that the Economic Survey had projected GDP growth of 6.5-7 percent for the financial year 2024-25.
"To reach 6.5 percent growth for the year, we would need 7 percent real GDP growth in the next two quarters, of which two months of the third quarter have already passed," Nageswaran said.
He expressed confidence that achieving growth in the range of 6.5-7 percent is still feasible, citing specific areas where growth has accelerated.
The Indian economy grew by 8.2 percent in the 2023-24 financial year. Meanwhile, the Reserve Bank of India (RBI) had projected a growth rate of 7.2 percent for the current fiscal year, higher than the 6.5-7 percent forecast in the Finance Ministry’s Economic Survey.
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