“The economy shows resilience underpinned by steady demand and strong manufacturing and service sector activity,” Nageswaran told reporters soon after the second quarter GDP data was released.
The Economic Survey had pegged the FY25 growth at 6.5%-7% on a high base of 8.2% last fiscal.
Consumption in rural India remains resilient and the October sales of select items of manufacturing in urban areas held up.
The order books of capital goods companies grew more than 20% in FY24, and agricultural and construction sectors have been putting up a good show, the CEA said.
He listed agriculture and construction among the bright spots. An expected bumper farm production in the kharif season and the bright prospects of rabi crops would boost farm income and rural demand.The labour market is showing signs of growth, with an easing unemployment rate and expanding formal workforce, he said. Manufacturing jobs have witnessed notable increase and there has been a strong inflow of youth into organised sectors.”Better growth in labour incomes holds the key to sustained demand growth and capital formation in the private sector,” Nageswaran said.
Global crude oil prices could remain low with the change of the guard in the US. This bodes well for India’s economic activity and price stability, he said.
The CEA said it’s too early to precisely forecast the full-year nominal GDP estimate and its impact on the fiscal deficit ratio. “Let’s also remember that these are first estimates in some sense, and our (Q2) data are not seasonally adjusted,” he added.
There is a need to examine the impediments that stand in the way of capital formation in the public sector, he said. “As I say, some of it could have been due to excessive rainfall in the second quarter and also uncertainty related to the election season. Therefore, there is room to ramp up capex in the remaining months of the year.”