'On track for GDP growth exceeding 6.8%'

The Indian economy can grow above the upper range of 6.8 per cent in 2025-26 (FY26) as estimated by the Ministry of Finance and it will not be surprising if the gross domestic product (GDP) goes above the 7 per cent mark for the current financial year, Chief Economic Advisor V Anantha Nageswaran said at the keynote address and a conversation with A K Bhattacharya during the Business Standard BFSI Insight Summit 2025.

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Nageswaran also said that inflation and the rupee are stable, and fiscal discipline keeps deficits and borrowing costs under control. Edited excerpts:

On economic outlook

Couple of months ago, we faced a penal tariff of 50 per cent from the US and a lot of us were wondering whether the economic growth rate in the current financial year would sort of tend towards the 6 per cent range. That was a concern at that time. Now, fast forward two months later, people are wondering whether it will be 7 per cent or above and we ourselves did not revise our growth forecast. By nature, we are somewhat on the cautious side. We had given a range of 6.3 to 6.8 per cent as the real GDP growth rate for 2025-26.

When we presented the first quarter GDP numbers, we said the second quarter was also looking to be on track to be a 7 per cent GDP growth number after looking at the two months of second quarter data at that time which we had by August. So, together we feel that this financial year, we will be somewhere to the north of our range of 6.3 to 6.8 per cent, even above 6.8 per cent for the full financial year. I will not be surprised if there is a 7 per cent handle in front of the decimal place for the full financial year.

On inflation, supply-side improvements, and structural change

Now, most of us would be looking at the CPI (retail inflation) numbers lately and thinking that it has come down to such low levels of below 2 per cent largely because of cyclical factors like food price inflation. However, we are not very good at understanding structural changes happening in real time.

And, the important thing is that we are not according as much value as we should be to investment in physical infrastructure and supply side infrastructure supplemented by digital infrastructure which has happened especially post-Covid.