India takes steps to achieve 6.5%-7% GDP growth target
2024.12.02 03:22
(Reuters) -The Indian government is implementing steps to achieve its economic growth target of 6.5%-7% in the current fiscal year, the country’s economic affairs secretary said on Monday, after slower-than-expected growth from July to September.
India’s economic growth slowed more than expected in the second quarter of the financial year, hampered by weaker expansion in manufacturing and consumption, adding pressure on the central bank to cut rates.
The government expects growth to accelerate in the second half of the year, Ajay Seth said.
Prime Minister Narendra Modi, after electoral wins last month in the state assembly elections of Maharashtra and Haryana, is expected to boost spending on infrastructure projects as part of the $576 billion budget plan announced in July.
India also plans measures including an increase in incentives to electric vehicle automakers to boost domestic manufacturing and amend insurance laws to raise the foreign direct investment (FDI) limit to 100% from 74%.
Analysts said that an increase in government spending in the second half of the fiscal year ending in March 2025, should boost growth.
“The quarter ending December is likely to benefit from a rise in government expenditure over the last few weeks,” said Pranjul Bhandari, chief economist at HSBC Research.
Bhandari added that a sharp rise in services and goods exports in October was likely to gain momentum, as inventories are stocked up globally in anticipation of higher trade tariffs in 2025.
