New Delhi: The Indian economy will grow around 7 percent in the current fiscal year and is on track to maintain a similar growth rate for several years, NITI Aayog member Arvind Virmani said on Friday.
Virmani said the country is facing new challenges and they will have to be addressed.
"The Indian economy will grow 7 percent plus minus 0.5 percent...I hope we are on track to grow 7 percent for several years from now," he said in an interview.
Last month, the Reserve Bank of India (RBI) pegged the gross domestic product (GDP) growth rate for FY25 at 7.2 per cent.
Responding to a question about the decline in private consumption spending in the last fiscal year, Virmani said it is actually recovering now.
"The effect of the pandemic was a reduction in savings ... and very different from previous financial shocks," he said.
Virmani further explained that it is like what he calls a double drought situation.
"We also had, of course, El Niño last year, but what the pandemic did was that people had to withdraw their savings... So the obvious reaction is to rebuild their savings, which tends to reduce current consumption. , " He noticed.
If people bought branded products, they would buy fewer branded or ordinary products and save some of that money, he said, explaining that this shows a drop in consumption.
Virmani said history shows that coalition partners can curb privatization in states where the regional ally is in power, but that is not a big problem.
"I see no reason why privatization cannot happen in other states and it can also happen in these states (where coalition parties are in power). I am just giving you a historical example," he said.
With the support of N Chandrababu Naidu's TDP and the Nitish Kumar-led JD(U), along with other alliance partners, the NDA crossed the halfway mark in the recent Lok Sabha elections to form the government at the Centre.
On the decline in foreign direct investment (FDI) in India, despite being the fastest growing economy, Virmani said the return on risk-free investment is much higher in the US and other developed countries than in emerging markets. .
"As soon as interest rates start coming down in the US, I expect FDI to increase in emerging markets, including India," he said.
Virmani said the country is facing new challenges and they will have to be addressed.
"The Indian economy will grow 7 percent plus minus 0.5 percent...I hope we are on track to grow 7 percent for several years from now," he said in an interview.
Last month, the Reserve Bank of India (RBI) pegged the gross domestic product (GDP) growth rate for FY25 at 7.2 per cent.
Responding to a question about the decline in private consumption spending in the last fiscal year, Virmani said it is actually recovering now.
"The effect of the pandemic was a reduction in savings ... and very different from previous financial shocks," he said.
Virmani further explained that it is like what he calls a double drought situation.
"We also had, of course, El Niño last year, but what the pandemic did was that people had to withdraw their savings... So the obvious reaction is to rebuild their savings, which tends to reduce current consumption. , " He noticed.
If people bought branded products, they would buy fewer branded or ordinary products and save some of that money, he said, explaining that this shows a drop in consumption.
Virmani said history shows that coalition partners can curb privatization in states where the regional ally is in power, but that is not a big problem.
"I see no reason why privatization cannot happen in other states and it can also happen in these states (where coalition parties are in power). I am just giving you a historical example," he said.
With the support of N Chandrababu Naidu's TDP and the Nitish Kumar-led JD(U), along with other alliance partners, the NDA crossed the halfway mark in the recent Lok Sabha elections to form the government at the Centre.
On the decline in foreign direct investment (FDI) in India, despite being the fastest growing economy, Virmani said the return on risk-free investment is much higher in the US and other developed countries than in emerging markets. .
"As soon as interest rates start coming down in the US, I expect FDI to increase in emerging markets, including India," he said.
