GDP growth rate
The Indian economy is likely to grow at the rate of 6.5 percent in the current and next financial years. The country’s economic growth rate in the September quarter was much lower than expected i.e. 5.4 percent. This is due to decline in private consumption expenditure and gross fixed capital formation. This was said in the EY report. In the second quarter July-September of the current financial year 2024-25, the GDP growth rate had fallen to the lowest level in seven quarters at 5.4 percent. The growth rate in the previous quarter was 6.7 percent. The decline in gross domestic product (GDP) growth rate in July-September was mainly due to a combined 1.5 percentage point decline in the two key elements of domestic demand, private final consumption expenditure and gross fixed capital formation.
slowdown in investment
“There is a slowdown in investment, as reflected in the growth of gross fixed capital formation,” the report said. This growth is estimated to be 5.4 percent in the second quarter of financial year 2024-25, which is the lowest level in six quarters. Apart from the fact that private investment demand has not picked up, the growth of government investment spending has been negative. In the first half of the current financial year, it has declined by 15.4 percent.’ The growth rate has been estimated to be 6.5 percent. It also highlights the importance of reforming India’s fiscal responsibility framework to achieve the goal of a developed India by FY 2047-48. It said a reoriented approach is important for sustainable debt management, eliminating government savings and promoting investment-led growth, which will pave the way for India’s transformation into a developed economy.
These changes will solve the current challenges
EY India’s Chief Policy Advisor D.K. Srivastava said, “The proposed amendments to the Fiscal Responsibility and Budget Management (FRBM) Act are necessary to enable India to pursue sustainable growth while maintaining fiscal prudence. The updated framework will help eliminate government savings, increase investment and build a more robust economy that is well prepared to face future challenges.” He said, ”These changes will not only address current challenges, But will also pave the way for change in India’s developed economy.
(With inputs from PTI/Language)
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