India’s Economic Growth Could Reach 8% in FY24, Says Chief Economic Adviser

India’s economic growth could reach 8 percent in FY24, according to V Anantha Nageswaran, the government’s chief economic adviser. Nageswaran expressed a desire for India’s GDP growth to reach 9.5-10 percent, similar to China’s, but noted that the context had changed.

Speaking at an event in New Delhi on May 8, Nageswaran stated that a growth rate of 6.5-7 percent is expected to be sustained in the coming years and emphasized the importance of maintaining this level of growth.

Regarding the Reserve Bank of India’s (RBI) guidelines on project financing, Nageswaran declined to comment, citing it as a draft proposal.

There are reports suggesting that banks will challenge the RBI’s proposal, which tightens norms for infrastructure project loans by requiring higher provisions. The Indian Banks Association (IBA) is gathering feedback and plans to communicate with the central bank.

The RBI’s proposal requires banks to set aside 5 percent of the loan amount for projects in the construction phase, which would reduce to 2.5 percent once the project becomes operational and further to 1 percent when a sufficient level of cash flow is achieved.

In February, Nageswaran had suggested that international organizations should raise their estimates of India’s potential growth rate to 7 percent or higher, given the country’s continued strong performance.

India’s GDP grew by 8.4 percent in the December quarter, the highest in six quarters. The last time the economy grew at a faster rate was in the first quarter of 2022-23, at 13.1 percent, which has since been revised down to 12.8 percent. The growth in the third quarter was driven by double-digit growth in the manufacturing sector, with the construction sector not far behind, growing at 9.5 percent.

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