India’s economy is set to achieve a robust growth rate of 6.5% in the fiscal year starting April 1, 2025, according to the latest EY Economy Watch report. This projection underscores the nation’s resilience and its potential to sustain long-term economic expansion through strategic fiscal measures.
The report highlights the importance of a well-calibrated fiscal strategy that prioritizes human capital development while maintaining fiscal prudence. It emphasizes the need for increased investments in education, healthcare, and infrastructure to support India’s evolving demographic structure and growing workforce requirements.
Revised national accounts data from the National Statistical Office (NSO) estimate India’s real GDP growth rates for FY23, FY24, and FY25 at 7.6%, 9.2%, and 6.5%, respectively. To meet the FY25 projection, the economy will require a 7.6% expansion in the fourth quarter, driven by private consumption and government capital expenditure.
The report also calls for addressing regional disparities through equalization transfers, ensuring that low-income states receive adequate funding for social sector investments. It suggests a phased approach to fiscal restructuring, including raising the revenue-to-GDP ratio from 21% to 29% over time, to generate necessary resources while maintaining fiscal discipline.
India’s Chief Policy Advisor at EY, DK Srivastava, stated, “India’s changing age structure is expected to increase the share of working-age individuals in the total population. If productively employed, this can create a virtuous cycle of growth, employment, savings, and investment.”
As India embarks on its journey toward sustainable growth, the EY report underscores the critical role of strategic investments and fiscal reforms in shaping the nation’s economic future.
