CAN INDIA RECLAIM ITS GROWTH MOMENTUM IN 2025?

India's projected GDP growth of 6.6 per cent during FY 2025, the lowest in four years, may signal concerns about the nation's economic trajectory, but optimism hinges on several factors to drive momentum, making 2025 a year for economic recalibration and reboot

- By Noor Fathima Warsia

INDIA'S GDP growth for FY 2025 is projected at 6.6 per cent, which positions the nation as a leading force in global economic expansion despite the slowest growth rate since the pandemic. The deceleration stems from multiple factors, including falling wages, declining corporate profits, persistent inflation, sluggish growth across key sectors, and a slowdown in manufacturing and investments.

According to the United Nations' economic report, South Asia is set to be the fastest-growing region globally, with regional GDP growth pegged at 5.7 per cent in 2025. India is set to lead this growth trajectory, contributing significantly to regional and global economic stability.

India's inflation rate is forecast to decelerate from 4.8 per cent in 2024 to 4.3 per cent in 2025, remaining within the 2-6 per cent medium-term target set by the Reserve Bank of India (RBI).

“The medium-term outlook, however, remains challenging, with downside risks from possible intensification of geopolitical conflicts, sporadic financial market turmoil, extreme climate events and rising indebtedness. Stretched asset valuations, fragilities in the less regulated non-bank financial intermediaries, and threats from new and emerging technologies also add to the evolving uncertain outlook,” says Sanjay Malhotra, Governor, RBI.

Despite regional and national growth prospects, India faces a delicate balancing act. The slowdown in growth, juxtaposed with inflationary pressures and sectoral stagnation, highlights the need for strategic interventions and sectoral resilience to ensure holistic economic growth.

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