According to the government's chief economic adviser, India's growth of more than 8% in the most recent quarter was caused by a number of consistent causes rather than just one-time events, indicating a strong economic momentum.
Chief Economic Advisor V Anantha Nageswaran stated in an interview on Thursday that base effects connected to subsidies, which increased the net indirect tax category, were mostly to blame for the unexpected 8.4% increase in the gross domestic product.
Nevertheless, he noted that high frequency indicators and growth of almost 8% over the preceding two quarters "point to the fact that it is not because of this one-time boost coming from indirect taxes" alone. "The economy is experiencing inherent and fundamental momentum."
According to Nageswaran, India's "optimal" growth rate is 7%, although an 8% growth rate is "desirable." Many economic reforms, some of which are "low-hanging fruit," he noted, such enacting labor and land regulations, would be necessary to achieve that quicker growth. According to him, that might "sustainably take us closer to 8%."
The government's official growth estimate of 7.6 percent for the current fiscal year ending in March, according to Nageswaran, a former banker who was nominated to his current position in 2022, is likely too conservative. According to the projection, the GDP would grow by 5.9% in the current quarter, which is "unrealistic," he stated. "There will be more growth than that," he continued.
His remarks are in line with those of Governor Shaktikanta Das of the central bank, who stated on Wednesday that growth will likely be close to 8% for this fiscal year.
He said that the economy's ability to grow at faster rates for a longer length of time has improved as a result of the government's focus on developing digital and physical infrastructure during the past 10 years.
The government of Prime Minister Narendra Modi has increased expenditure on infrastructure over the last three years and has budgeted almost 11 trillion rupees ($133 billion) for the field in the upcoming fiscal year.
