Indian economy performing better than feared two months ago: CEA Nageswaran

CEA V Anantha Nageswaran says India's economy is performing better than expected, with growth likely above 6.7 per cent this fiscal, aided by fiscal discipline, tax reforms, and steady inflation

India’s economy is performing better than expected and is likely to post growth north of 6.7 per cent in the current financial year, Chief Economic Advisor (CEA) V Anantha Nageswaran said on Wednesday, noting that earlier concerns about a slowdown have eased significantly.

 

Speaking at Business Standard’s annual BFSI Summit 2025 in Mumbai, Nageswaran said, “The economy is doing as well as it can and better than what we feared a couple of months ago.”

 

He pointed out that as recently as two months ago, growth projections hovered around 6 per cent due to global uncertainties, including the high US tariff actions taken under President Donald Trump. “Now, people are wondering whether it’ll be 7 per cent or above,” he added.

 

Growth outlook and drivers of resilience

 

According to Nageswaran, the government expects real GDP growth between 6.7 and 6.8 per cent for FY25 — a performance he described as encouraging amid rising external challenges. 

 

He attributed this resilience to tax simplification in the Union Budget, GST process revisions in September, and adherence to fiscal prudence. “In this year’s Budget, there was tax relief to citizens and simplification efforts, and in September, considerable revision of GST rates and processes. All of it is beginning to pay off as a boost to consumption and private capital expenditure,” he said.

 

Fiscal discipline and balanced growth approach

 

Nageswaran emphasised that the government’s approach to growth balances both demand and supply considerations. “It is fallacious to say the government is shifting from demand to supply side. Both are part of the same coin,” he said, adding that keeping inflation firmly in check is central to sustaining investment momentum.

 

He noted that structural investments in infrastructure and digital public goods have reduced cyclical overheating and improved logistics efficiency. “Improvement in ports, highways, power generation, and airports, along with the formalisation facilitated by digital infrastructure, are improving demand despite external uncertainties,” he said.

 

The CEA added that these developments would help India’s inflation “converge to the levels of developed economies” over time.

 

Rupee and financial stability outlook

 

On the currency front, Nageswaran projected that the rupee would become “even stable to stronger in coming years than the historical average depreciation pattern against the US dollar.”

 

Turning to financial stability, he urged banks to adopt a stronger stance against rising digital frauds, describing it as a matter of both obligation and an incentive for self-preservation. “Without that, people will lose their depositors and trust and start keeping money under their mattresses. Over time, it will erode the bankability of banks,” he cautioned.

 

Need for digital adoption in banking

 

Nageswaran called for greater use of existing digital tools, pointing out that banks and financial institutions continue to rely on paper documentation despite having access to customer data. “We as a society have to change, not only the government. Banks have to set examples,” he said.

 

India’s long-term position in a changing world

 

Looking ahead, Nageswaran said global economic trends over the next 25 years would be “materially different” from the past, with the world shifting from consolidation to fragmentation.

 

In that context, he said India must aim for “strategic invulnerability” to become “strategically indispensable” to the world economy.