India starts 2025 on a sombre note with the passing of Dr Manmohan Singh, whose bold first-generation reforms in 1991 set the country on the path to faster growth. The economy is also slowing, with Q2 FY25 growth dropping to 5.4 per cent. Over the past three years, it performed well above expectations, growing at 8.7 per cent in FY22, 7.2 per cent in FY23, and 8.2 per cent in FY24, driven by public capital expenditure, substantial investments in global capability centres (GCCs), and surging service exports.
Government experts and analysts think the dip in last quarter's growth is temporary. That will be known soon but, nevertheless, with no widespread revival in domestic private investment and GCC investment having peaked, India's growth will decline, unless it undertakes much delayed second-generation reforms.
What is also worrisome are the rising global uncertainties. In its latest World Economic Outlook update, the International Monetary Fund (IMF) projects baseline annual global growth at a much lower 3.1 per cent for 2024-2029, compared to 3.7 per cent in the 20-year period from 2000-2019, which included the Global Financial Crisis, and warns it is subject to huge downside risks.
This story is from the January 02, 2025 edition of Business Standard.
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This story is from the January 02, 2025 edition of Business Standard.
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