India's Economic Outlook: Growth Expected Despite Inflation Challenges

Secretary Ajay Seth highlights India's economic resilience amid concerns of slowing growth and inflation. While acknowledging some slowdown, Seth emphasizes no significant downside risks, with GDP growth projected between 6.5-7% for 2024-25. Inflation pressures are primarily linked to the food sector, with capital expenditure expectations largely intact.

In a candid assessment of India's economic trajectory, Ajay Seth, Secretary to the Department of Economic Affairs, emphasized that the nation is not poised for any substantial setbacks in economic growth. Despite a minor slowdown and rising inflation, the economy demonstrated a 6.7% growth in the April-June quarter, slightly below the Reserve Bank of India's 7.1% forecast. The upcoming GDP data for the July-September quarter, scheduled for release on November 29, is eagerly anticipated.

Speaking at the Federation of Indian Chambers of Commerce & Industry's event prior to its 97th AGM and Annual Convention, Seth acknowledged the slowdown in certain sectors. However, he confidently assured that the projected growth range of 6.5% to 7.0% would remain largely unaffected by any significant downside risks. "The growth could hover closer to 6.5% or 7.0%, but I refrain from speculating further," Seth remarked.

While the Economic Survey presented in Parliament projected a conservative 6.5-7% growth rate for real GDP in 2024-25, Seth noted that market expectations are more optimistic. These figures relate to real GDP, which is inflation-adjusted. Despite challenges, India's economy grew by 8.2% in the fiscal year 2023-24, reinforcing its status as the fastest-growing major economy. Though the previous financial years saw growths of 7.2% and 8.7%, the current slowdown is tied to decreased capital expenditure during elections and rising inflation, especially in food.

Addressing inflation, Seth pointed out that its scope is largely confined to the food sector, indicating no broader challenges. As for government's capital expenditure, a 11.11 lakh crore outlay is expected in 2024-25, with an 11.11% increase from the previous year, suggesting minimal shortfall concerns.

(With inputs from agencies.)