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India expects growth of more than 7% for FY25, says its chief economic adviser

The government’s chief economic adviser Anantha Nageswaran expects the Indian economy to grow by more than 7% this fiscal. The CEA also forecast that the economy can sustain growth of more than 6.5%-7% for ten years, supported by investments in physical and digital infrastructure.

On inflation, Nageswaran said India would not see any “nasty benefits”.

“There can always be scenarios in geopolitics that could cause inflation to be higher than we expect, but right now the base case is that inflation gradually converges to the middle of the target range,” he said.

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However, the April RBI bulletin warned that extreme weather conditions and prolonged geopolitical tensions could lead to volatile crude oil prices and pose inflation risks.

Speaking at an event organized by the National Council of Applied Economic Research in New Delhi, the CEA said, “The omens are good for us to continue the steady pace of growth.”

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The CEA added that India’s Monetary Policy Committee is mandated to keep inflation within a target range of 2% to 6% and that the central bank, the Reserve Bank of India, wants to see it at 4% before cutting rates .

Nageswaran said the Indian economy was better positioned than before to pursue “non-inflationary” growth.

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Last month, in an article titled ‘State of the Economy’, the RBI said conditions are shaping up for a sustained rise in real GDP growth, which averaged over 8% between 2021 and 2024.

RBI Deputy Governor Michael Patra recently said that India can achieve a growth rate of 10% in the next decade and become the second largest economy by 2032, and the largest by 2050.

The RBI’s monetary policy committee, in its April 6 policy, maintained real GDP projections for FY25 at 7% and consumer price-based inflation at 4.5%.

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