Growth rate of 6.3-6.8% for FY26 a reasonable prospect, says CEA Nageswaran

V Anantha Nageswaran, Chief Economic Advisor, Government of India
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BIJOY GHOSH

Chief Economic Advisor V Anantha Nageswaran on Thursday termed the growth estimate of 6.3-6.8 per cent as a reasonable prospect. He also noted that post the 90-day period of tariff pause, India will have advantage in some new sectors.

Speaking at the CII Annual Business Summit 2025, Nageswaran listed few silver linings for India amid global uncertainty. Firstly, energy prices are lower. Secondly, regardless of how tariff numbers play out after the 90-day expiration — whether from the Liberation Day on April 2, or the 90 days given to China from May 12, etc — there will be some sectors where India did not enjoy an advantage before, “it may enjoy an advantage later, from the tariff perspective, that’s also an opportunity, and therefore it is quite possible,” he said.

Third, monetary policy has become less unfavourable for growth this year compared to the settings that we had in 2024. Fourth, the government’s major tax relief given to the middle class kicks-in this year. And fifth, the progress of the monsoon has been good. The expectation is that it will be above average and also spatially well distributed.

“If you count these positive factors, to be able to achieve the growth rate that we pencilled in the economic survey between 6.3 and 6.8 per cent and sustain it for the longer period, seems like a reasonable prospect, and the International Monetary Fund (IMF) agrees with us,” he said.

He also asked the private sector not to expect that the Indian rupee will necessarily be weakening as it did in the last 30 years, because, for various reasons, “it is quite possible that we may have to deal with the challenge of living in an environment of a stronger currency rather than a weaker currency because of international trends,” he said.

Further, the need to become competitive based on domestic productivity improvements, for which deregulation also has to make a big contribution that becomes more important than before. “These are so from a short term cyclical perspective, we should not be overly consumed by the global uncertainty,” he said.

Talking about huge domestic demand, he said that Indian economy is a domestic economy with 60 per cent private consumption share of GDP. “To sustain this capital formation by the private sector taking over the mantle from the government of the last six years, investing, hiring, compensating, creating aggregate demand growth and therefore justifying the investments made, is a virtuous endogenous circle which we need to recognize and tap into,” he said.

Published on May 29, 2025