Janice R. Andrews
India’s economic momentum is set to remain robust despite global uncertainties, driven by strong rural demand, recovering urban consumption, and improved agricultural output, according to Chief Economic Adviser V Anantha Nageswaran. Speaking during a briefing on Q3 GDP numbers, Nageswaran highlighted India’s medium-term growth prospects, with the economy expanding by 6.2% in Q3 FY25, up from 5.4% in the previous quarter.
Nageswaran pointed to robust kharif production, better rabi sowing, and higher reservoir levels as key factors supporting output growth. He also emphasized the positive impact of the Union Budget’s focus on agriculture, MSMEs, investment, and exports, along with tax cuts boosting middle-class purchasing power.
However, challenges such as inflation, sluggish export growth, stock market volatility, a strong US dollar, and rising Japanese interest rates could pressure capital flows. Despite these headwinds, Nageswaran believes their impact will be more pronounced in financial markets than on the real economy.
“India’s economic momentum is expected to sustain. Strong rural demand, recovering urban consumption, and improved agricultural output are positive indicators,” he said. He also stressed the need for private sector investment to strengthen growth sustainability, urging businesses to focus on India’s stability and growth potential rather than global uncertainties.
The near-term global outlook remains uncertain, with trade policies of major economies and slowing disinflation potentially fueling inflation, tightening financial conditions, and increasing market volatility. A strong US dollar and rising Japanese interest rates could further accelerate capital outflows from emerging markets, raising risk premiums and external risks.
Nageswaran also highlighted the economic impact of events like Mahakumbh, noting that increased private expenditure on travel, food, and accommodation—driven by the influx of visitors to Prayagraj—will significantly boost Q4 consumption expenditure.
With a resilient domestic economy and supportive policy measures, India is well-positioned to sustain its growth trajectory, even as global challenges persist.
