Indian Economy To Grow At 6.5 Per Cent In FY25 And FY26, Says EY Economy Watch

The report noted that real GDP growth slowed down to reach a 7-quarter low of 5.4 per cent in Q2 in FY25, in comparison to 6.7 per cent expansion rate clocked in the preceding quarter

The report said that as global conditions remain uncertain and global trade stands likely to implode, India might need to depend majorly on domestic demand and services exports.

Source : ABPLIVE AI

The Indian economy is projected to grow at 6.5 per cent in the current and next fiscal year, an EY report revealed. The study attributed this growth rate to a lower than expected surge in the September quarter, a decline in private consumption expenditure and gross fixed capital formation.

The study showed that real GDP growth slowed down to reach a seven-quarter low of 5.4 per cent in the second quarter in the current 2024-25 fiscal year (FY25), in comparison to 6.7 per cent expansion rate clocked in the preceding quarter. This dampening was attributed to two domestic demand components, i.e., private final consumption expenditure and gross fixed capital formation, which together accounted for a slip of 1.5 percentage points,reported PTI.

The EY Economy Watch December 2024 report projected that the real GDP growth of the Indian economy will reach 6.5 per cent in FY25 and FY26 (2025-26). The report also highlighted that it is crucial to reform the fiscal responsibility framework in the country to achieve the Viksit Bharat vision by 2047-48. 

The report pointed out that as global conditions remain uncertain and global trade stands likely to implode, India might need to depend majorly on domestic demand and services exports.

The Economy Watch report also suggested that the overall debt of the central and state governments together should not surpass 60 per cent of the country’s nominal GDP. Further, both levels of government need to balance their current/operating income and spending to help push national savings.

D K Srivastava, Chief Policy Advisor, EY India, noted, “The proposed revisions to the Fiscal Responsibility and Budget Management (FRBM) Act are essential for enabling India to pursue sustainable growth while maintaining fiscal prudence. The updated framework would help eliminate government dissaving, increase investment, and create a more resilient economy that is well-equipped to meet the challenges of the future.”