According to government sources, India intends to project nominal economic growth of 10.3%–10.5% for the upcoming fiscal year, which is higher than the current year’s forecast of 9.7%. As the country prepares for its slowest growth in four years in 2024–2025, the optimistic prognosis attempts to allay fears of an economic slowdown.
N.R. Bhanumurthy, director of the Madras School of Economics, stated that the growth forecast, which is fuelled by government capital expenditures, agriculture, and a resurgence in exports, is feasible. The administration of Prime Minister Narendra Modi has prioritised increasing growth through infrastructure spending, production-linked incentives for manufacturing, and corporate tax cuts.
To boost demand among salaried workers impacted by slow pay growth and high food inflation, Finance Minister Nirmala Sitharaman is anticipated to announce personal income tax cuts in the February 1 budget. Despite these measures, India is still committed to lowering its fiscal deficit. It projects this year’s budget shortfall to be 10–20 basis points smaller than the 4.9% early forecast, which was partially caused by spending delays brought on by the monsoon and elections.
India wants to reduce its fiscal deficit to less than 4.5% in the upcoming fiscal year.
