To become a developed nation by 2047, a goal set under the ‘Viksit Bharat’ banner, India’s Finance Ministry says the country must achieve a real economic growth rate of 8% per year for the next decade. This growth is expected to be fueled by strong domestic demand and increased investments.
Thank you for reading this post, don't forget to subscribe!Currently, the government projects growth of 6.3% to 6.8% for the 2024-25 fiscal year, which is similar to the 6.5% growth recorded last year but significantly lower than the 9.2% seen in the 2022-23 fiscal year.
To hit the 8% growth target, the ministry also notes that India needs to boost its investment rate from the current 31% of GDP to approximately 35% of GDP.
The path to this goal faces challenges from geopolitical issues. The ministry’s estimates were made before the US imposed an additional 25% tariff on Indian goods, a move reportedly made in response to India’s oil purchases from Russia. The total 50% tariff could potentially shave up to 40 basis points off growth in 2025-26. Furthermore, recent trade talks with the US have stalled as India prioritizes access for its labor-intensive exports over opening up its agricultural and dairy markets.
