Don't throw the baby out of bathwater! CEA wants you to trust India's growth story

After India's economy slowed to a seven-quarter low of 5.4% in the July-September quarter, Chief Economic Advisor (CEA), Dr. V. Anantha Nageswaran urged caution in reacting to the GDP figures, emphasizing that despite the dip, the underlying growth story remains strong and intact.

In reacting to the GDP number, "We should not throw the baby out of the bathwater" because the underlining growth story still remains very much intact, said the CEA at an ASSOCHAM event.

He said, this number should not be overinterpreted, as a spike in the global uncertainty index was seen in the second quarter and supply chain pressures also intensified.


Also Read: Great Indian shopper goes silent while country may have two vicious circles to break

This is the first estimate and it could be revised higher, said Dr Nageswara.

Meanwhile, economists have lowered their India growth forecast after the GDP data released last month showed a sharp deceleration of the country’s economic expansion. Goldman’s economists Santanu Sengupta and Arjun Varma have revised their projection to 6% for the year through March 2025, down from 6.4%.

Other analysts also lowered their forecasts aggressively for the year.

The “growth shock” was due to “much lower manufacturing growth than assumed,” said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd., who lowered her growth forecast to 6% from 6.5% earlier. “We see urban consumption staying pale ahead owing to weaker incomes, even as we believe that the pick-up in rural consumption is only cyclical,” she said.