India’s economy has demonstrated resilience, despite global challenges. The ADB (Asian Development Bank) report highlights that the industrial sector and services sector are experiencing strong momentum, boosting overall growth. Additionally, private investments are rising, and urban areas are seeing more consumption, helping drive the country’s economic performance. An above-average monsoon is expected to enhance agricultural production, supporting rural growth and increasing household spending.
Strong Growth Expected for India’s Economy
According to the ADB report, India’s economy is set to grow by 7% during the financial year 2024-25, which will end on March 31, 2025. The growth rate is expected to increase further to 7.2% in 2025-26. This robust expansion is driven by India’s industrial and services sectors, combined with increased private investments and higher urban consumption.
Government Policies and Job Creation
The Indian government has introduced new policies aimed at encouraging employment. These job-linked incentives are expected to increase labor demand starting in FY 2025, which will further stimulate domestic consumption and economic activity. This job creation initiative will not only help reduce unemployment but also fuel growth in various sectors of the economy.
Fiscal Responsibility and Debt Reduction
The ADB report also provides positive news about India’s fiscal health. The central government’s debt is projected to decrease from 58.2% of GDP in 2023-24 to 56.8% by 2024-25. Similarly, the general government deficit, which includes state governments, is expected to fall below 8% of GDP. These efforts indicate that India is on a more sustainable financial path for the future.
External Sector and Trade Improvements
India’s current account deficit is expected to reduce to 1% of GDP in 2024-25, down from previous estimates of 1.7%. This improvement is attributed to stronger exports, fewer imports, and increased remittances. This positive shift will help strengthen the country’s external financial position.
Inflation and Potential Risks
Despite the strong growth, the report warns of potential risks. Inflation, driven by high food prices, is expected to reach 4.7% in 2024-25. However, if agricultural output improves, food prices may stabilize, allowing the Reserve Bank of India to relax monetary policies and increase credit flow. Other concerns include geopolitical shocks and weather-related risks, but foreign direct investments and improved agricultural supplies could balance these challenges.
