India expects public expenditure to pick up in FY25 remaining quarters

The ministry has projected a GDP growth of 6.5-7 per cent for FY25, based on the GDP growth of 6.7 per cent in Q1 FY25 and the movements in high-frequency indicators till August.

Navigating the continuing uncertainty in global economic prospects is a challenge on the macroeconomic front, it noted. “We will likely encounter a cycle of policy rate cuts globally, amid fears of a recession in advanced economies and continuing geopolitical conflicts,” it said.

“As public expenditure picks up and the rural economy strengthens, the overall growth is expected to remain steady in the subsequent quarters… urban consumption shows some signs of weakness, evident in the decline in automobile sales in the first five months of the current financial year compared to the same period last year,” the review document said.

The document noted that the risk of market correction has risen amid a boom around the world and if this risk materialises, the spillover effect may be felt globally as well. Low oil price is a bright spot for the economy.

India’s export of goods, even after considering the drop in prices of petroleum products, has grown negligibly year on year in the first five months this year, the review noted. “It reflects weak global demand and India’s persisting challenges with scaling up production, productivity and competitiveness,” the document said.

In the absence of any serious adverse climate shocks, rural incomes and demand should get stronger, and food inflation should be milder, it added.

ALCHEMPro News Desk (DS)