CEA Nageswaran bets on reforms, stability to lift growth above 7% again
Chief Economic Advisor V Anantha Nageswaran projected India’s growth will rebound to over 7% in FY28, citing reforms and macro stability, despite a revised RBI forecast of 6.6% for FY27 due to the West Asia crisis. He highlighted resilience in domestic demand, infrastructure investments, and policy measures like Customs duty waivers and trade agreements as key growth drivers.
India’s economy grew 7.7% in FY26, with the fourth quarter expanding 7.8%, according to provisional GDP estimates released by the government. Chief Economic Advisor V Anantha Nageswaran attributed this growth to strong private consumption and an 8.2% rise in gross fixed capital formation, signaling sustained domestic demand. Nageswaran forecasted growth will return to over 7% in FY28, provided external conditions improve, despite the Reserve Bank of India (RBI) revising its FY27 growth forecast downward to 6.6% due to risks from the West Asia crisis. The RBI also raised its inflation forecast to 5.1% for FY27, with upside risks. Nageswaran acknowledged the uncertainty but emphasized that macroeconomic stability measures and supply-side reforms would mitigate the impact. The government’s structural reforms, including public capital expenditure and infrastructure investments over the past decade, have bolstered resilience, Nageswaran said. High-frequency indicators from January to April—such as automobile sales, steel, cement, and infrastructure goods—showed mild-to-strong growth, suggesting continued momentum despite the geopolitical tensions. Policy measures to address the crisis include Customs duty waivers on 40 petrochemical products, an emergency credit guarantee scheme for MSMEs, and securing fertilizer supplies for over 50% of the kharif season. Trade agreements with the UK, EU, and US are expected to support exports amid global trade challenges. However, Nageswaran cautioned that external risks, including a widening trade deficit in FY26, could persist.
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