NCAER Projects Indian Economy To Achieve Over 7% Growth In 2024-25

In addition, high-frequency indicators suggest that the domestic economy has shown resilience, prompting upward revisions in various agencies' growth projections for 2024-25

Earlier this month, the Reserve Bank of India projected a GDP growth rate of 7.2 per cent for FY25

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India's economy is expected to grow above 7 per cent, possibly nearing 7.5 per cent, in the current fiscal year, according to the economic think tank National Council of Applied Economic Research’s (NCAER) monthly review released on Wednesday. This outlook is supported by expectations of an above-normal monsoon and a lack of significant global risks thus far. 

In addition, high-frequency indicators suggest that the domestic economy has shown resilience, prompting upward revisions in various agencies' growth projections for 2024-25. NCAER stated that growth projections for the current fiscal year range between 7.2 per cent and 6.2 per cent.

Poonam Gupta, Director General of NCAER, expressed optimism, stating, "GDP growth during 2024-25 may turn out to be higher than 7 per cent and even closer to 7.5 per cent." 

She attributed this positive outlook to robust economic activity observed in the first quarter, a strong policy focus on investment, growth, and macroeconomic stability, as well as expectations of a normal monsoon. 

Gupta also noted that with inflation appearing to have peaked, further tightening of monetary policy is unlikely. "Finally, the global environment seems benign as well in the absence of any known global risks so far," she added. Gupta highlighted that managing food prices remains a persistent challenge.

"A broader policy framework may be needed to address it, including building climate-resilient food supply as also a gentle shift toward packaged and preserved food supply to bridge the periodical supply and demand gap that has become routine," she opined.

Earlier this month, the Reserve Bank of India projected a GDP growth rate of 7.2 per cent for FY25. In May, retail inflation dropped to a 12-month low of 4.7 per cent, although food inflation remained high. The RBI, tasked with maintaining inflation at 4 per cent (with a margin of 2 per cent on either side), primarily considers CPI (consumer price index-based inflation) in formulating its monetary policy.

According to NCAER, high-frequency indicators indicate that the domestic economy continues to display resilience. The Manufacturing and Services Purchasing Managers' Index (PMI) maintained its expansionary momentum in May, albeit at a slightly slower pace.

In April 2024, growth in the Index of Industrial Production (IIP) for core industries accelerated. Goods and Services Tax (GST) collections showed robust year-over-year growth, while bank credit growth remained above 20 per cent despite a slowdown in personal credit growth.

Furthermore, despite deficient rainfall in June, the report added that the agricultural sector remained optimistic about an above-normal monsoon.