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According to the report from the Department of Economic Affairs in its February 2024 Monthly Economic Review, growth in the fifth quarter of financial year 2025 is likely to be driven by improved export growth, a pick-up in government capital expenditure post-elections, and the impetus…Read More
There are many reasons why the government believes double-digit growth is attainable. Representational image
The Indian economy is expected to achieve a growth of 6.5% in the financial year 2025 despite external turmoil and upheaval in many parts of the world. This is according to a report from the Department of Economic Affairs in its February 2024 Monthly Economic Review. The report states that economic growth picked up in the third quarter, largely due to increased private consumption and growth in core merchandise and services exports.
According to the report, retail inflation eased to a seven-month low of 3.6% in February 2025 due to price trends in food items. Gross FDI inflow is robust, increasing by 12.4% from April to January 2025. The report also suggests a stable labour market, with optimism in the employment scenario and positive prospects for future hiring.
With the US crackdown on tariffs, global uncertainties, and war-like scenarios in some regions, it was felt that these factors would resonate in India’s economy. However, the Indian government has been negotiating tariffs openly, and the resilience of India’s economy has given hope not just for a rise in growth but also for the sustained strength of the Indian economy.
There are many reasons why the government believes double-digit growth is attainable. There has been a recovery in private consumption, and vigorous agricultural activity has supported rural demand. Service sector performance also remains robust. As stated in the report, “Growth in the fifth quarter of financial year 2025 is likely to be driven by improved export growth, a pick-up in government capital expenditure post-elections, and the impetus to economic activity associated with the Kumbh Mela.”
The recent Union Budget provided significant benefits to the middle class with tax rebates. The government hopes this will increase the purchasing power and influence the consumption patterns of the middle class. The government remains optimistic that increased spending will further bolster economic growth.
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