NITI Aayog member Arvind Virmani forecasted on Friday that the Indian economy is set to grow by approximately 7% in the current fiscal year and maintain a similar growth trajectory for the foreseeable future.
“Indian economy will grow at 7 per cent plus minus point 0.5 per cent… I expect that we are on track to grow at 7 per cent for several years from today,” he told PTI in an interview.
Last month, the Reserve Bank of India (RBI) projected a GDP growth rate of 7.2% for fiscal year 2025.
Addressing a query on the decline in private consumption expenditures in the previous fiscal year, Virmani noted signs of recovery.
“The effect of the pandemic was to draw down savings… and very different from previous financial shocks,” he said.
Explaining further, Virmani said it is like what he calls a double drought situation.
“We also had, of course, El Nino last year, but what the pandemic did was that it resulted in people having to draw down their savings… So, the obvious reaction is to rebuild your savings, which tend to reduce current consumption,” he noted.
“If people were buying branded goods, they will buy less branded or ordinary goods and save part of that money,” he said, highlighting a shift in consumer behavior.
Regarding privatization challenges in coalition-led states, Virmani cited historical precedents but expressed optimism. “I see no reason why privatization cannot proceed in these states,” he stated, noting recent political developments.
Commenting on the decline in foreign direct investments (FDI) despite India’s rapid economic growth, Virmani attributed it to higher returns on investment in developed markets.
“As US interest rates decline, I anticipate increased FDI inflows into emerging markets, including India,” Virmani concluded.
In the recent Lok Sabha elections, the NDA secured a majority with support from various alliance partners including N Chandrababu Naidu’s TDP and Nitish Kumar-led JD(U).
(PTI inputs)