India's Economy Set to Grow by 7% in 2024-25, Boosted by Strong Industrial and Service Sectors: ADB Report The central government's debt is expected to decrease from 58.2 per cent of GDP in FY 2023-24 to 56.8 per cent by FY 2024-25, while the general government deficit, including state governments, is predicted to fall below 8 per cent of GDP
You're reading BIZ Experiences India, an international franchise of BIZ Experiences Media.
India's economy is poised for robust growth, with gross domestic product (GDP) projected to expand by 7 per cent for the financial year 2024-25, ending March 31, 2025, and further accelerate to 7.2 per cent in FY 2025-26, according to the Asian Development Bank's (ADB), report, Asian Development Outlook. The September 2024 edition highlights strong momentum in the country's industrial and services sectors, coupled with increasing private investment and urban consumption, as key drivers of this expansion.
The report emphasizes that India's economy has shown remarkable resilience in the face of global geopolitical challenges and is poised for steady growth; and an above-average monsoon is expected to boost agricultural output, further supporting rural economic growth and enhancing household spending. In addition to these positive forecasts, a new government policy focusing on employment-linked incentives is expected to spur job creation from FY2025. The policy aims to increase labor demand, providing a further boost to domestic consumption and overall economic activity.
The central government's debt is expected to decrease from 58.2 per cent of GDP in FY 2023-24 to 56.8 per cent by FY 2024-25, while the general government deficit, including state governments, is predicted to fall below 8 per cent of GDP. These efforts signal a more sustainable fiscal path moving forward. The ADB report also sheds light on the country's external sector, predicting a reduction in India's current account deficit to 1 per cent of GDP in FY 2024-25, down from earlier estimates of 1.7 per cent, due to stronger exports, lower imports and increased remittances.
However, the report flags potential risks, including inflation pressures driven by high food prices, which are forecasted to reach 4.7 per cent in FY 2024-25. If agricultural output improves significantly, food prices may stabilize, allowing the Reserve Bank of India to ease monetary policy and support further credit expansion. Geopolitical shocks and weather-related risks remain concerns for the short term, but increased foreign direct investment and improved agricultural supply could counterbalance these threats, driving sustained growth.
