India Set To Achieve 7% GDP Growth In FY25: NITI Aayog Member

He explained that if people were previously purchasing branded goods, they might now opt for fewer branded or standard items and save a portion of their money, indicating a decline in consumption

Arvind Virmani, a member of NITI Aayog, projected that the Indian economy is poised to grow at approximately 7 per cent in the ongoing fiscal year, with expectations of sustaining this growth rate over the coming years. He emphasised that while the economy shows promising growth prospects, it must address emerging challenges effectively.

"Indian economy will grow at 7 per cent plus minus point 0.5 per cent... I expect that we are on track to grow at 7 per cent for several years from today," Virmani told PTI in an interview.

The Reserve Bank of India (RBI) forecasted a 7.2 per cent gross domestic product (GDP) growth rate for FY25 last month. Addressing concerns about the decline in private consumption expenditures during the previous fiscal year, Virmani noted that there is now a visible recovery underway. "The effect of the pandemic was to draw down savings... and very different from previous financial shocks," he said.

Expanding on his point, Virmani likened it to what he describes as a "double drought" scenario. "We also had, of course, El Nino last year, but what the pandemic did was that it resulted in people having to draw down their savings... So, the obvious reaction is to rebuild your savings, which tend to reduce current consumption," Virmani highlighted.

He explained that if people were previously purchasing branded goods, they might now opt for fewer branded or standard items and save a portion of their money, indicating a decline in consumption. Virmani added that historical data indicates coalition partners in states where regional allies hold sway may impede privatisation efforts, but he downplayed its significance.

"I see no reason why privatisation cannot happen in the other states, and it may also happen in these states (where coalition parties are in power). I am just giving you a historical example," he said.

Regarding the decrease in foreign direct investments (FDI) into India, despite its status as the fastest-growing economy, Virmani highlighted that the perceived safety of investment returns is considerably higher in the US and other developed nations compared to emerging markets. "As soon as interest rates begin to come down in the US, I expect the FDI into emerging markets, including India, to increase," he noted.