With global economic growth projected at 3.2% in 2025, lower than pre-pandemic levels, India must address local and global challenges to sustain its growth momentum. Policymakers can reverse recent slowdowns and implement structural reforms to achieve a potential growth rate of 7%.
BulletsIn
- Global fiscal volatility and US trade policies may increase capital outflows from emerging markets.
- Indian policymakers urged to allow greater rupee volatility to address currency risks.
- Reversing unintended fiscal tightening in H1 FY2025 could provide a growth boost.
- Slow credit growth driven by high loan-deposit ratios and tight liquidity; RBI easing liquidity to improve the situation.
- CRR cut in December 2024 expected to support credit growth; additional measures needed.
- Growth supported by rising real-estate activity, affordable housing prices, and low inventories.
- Investments in emerging sectors like data centers, energy storage, and defense manufacturing to sustain momentum.
- Policymakers should leverage the ‘China + 1’ strategy for global manufacturing opportunities.
- Improving urban infrastructure critical to sustaining real-estate and economic cycles.
- Addressing income inequality, ensuring education, and focusing on India as a ‘product nation’ vital for long-term growth.




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