Economy could grow at 7% this fiscal: CEA Sugar supply fine, but export ban stays
New Delhi: As part of the Union government’s drive to educate consumers about fraudulent practices, the consumer affairs ministry will launch a podcast that will help raise awareness about such malpractices, two people aware of the matter said. The Central Consumer Protection Authority (CCPA) will use a storytelling format for the podcast to explain the experiences of fraud victims and the resolution of their problems.
India’s economy likely expanded at 8% through fiscal year 2024, and growth in the current year is projected at 7%, V. Anantha Nageswaran, chief economic adviser to the government, said at an event organized by the think tank National Council of Applied Economic Research (NCAER) on Wednesday.
Nageswaran said that for the Indian economy to register 7% or higher growth for the fourth consecutive year in FY25, “a lot would depend on the monsoons”.
“Right now, the expectations are that we will have an abovenormal monsoon. But, [its] spatial and temporal distribution will matter,” he said.
On inflation, Nageswaran said he doesn’t foresee any significant upside risk for now and expects retail inflation to remain at the midpoint of the RBI’s target range of 2–6% in
FY25. “There can always be scenarios on the geopolitical front that can cause inflation to be more than what we expect. But at this point, our baseline scenario is that inflation gradually converges towards the midpoint of the target range in FY25,” he added.
Though CPI inflation remains above the central bank’s target of 4%, it has stayed within its tolerance range of 2-6% for the seventh consecutive month in March.
Nageswaran also batted for growing small and medium enterprises to help increase the share of manufacturing in the country’s overall GDP. “Building blocks such as supply-side infrastructure, physical connectivity, and financial inclusion are good work in progress. But compliance burdens and inspection burdens that businesses face at the subnational government level need to be addressed to grow the manufacturing share of GDP,” he added.
The Centre is not considering lifting its ban on sugar exports despite comfortable supply in the domestic market, as it prioritizes availability, sufficient opening balance and ethanol blending to meet its E20 target (20% ethanol mix with petrol) by 2025-26, two officials said.
India has placed an indefinite ban on sugar exports—first imposed in June 2022—amid fears of poor crop and rising prices.
This stand comes against the backdrop of the sugar industry lobby—the Indian Sugar and Bio-Energy Manufacturers Association (ISMA)—pitching for the Union government to allow 2 million tonnes (mt) of exports in the current marketing year ending September.
According to ISMA, sugar production in the 2023-24 (October-September) season is estimated to be 32mt, including an extra 500,000600,000 tonnes in Karnataka and Tamil Nadu, against a consumption of 28.5mt, compared with last season’s production of 32.9mt. This leaves room for the government to allow export of 2mt sugar after taking into account an opening stock of approximately 5.6mt as of 1 October 2023 and a closing stock of 9.1mt by 30 September 2024.
However, one of the officials cited above said, “Though sugar production now seems comfortable, and we have sufficient stocks, we are not considering sugar exports as of today. Our priority is domestic consumption, sufficient balance for around three months followed by ethanol blending.”
Around 7mt is projected to be the opening balance (as of 1 October 2024). This is based on rough calculations of domestic consumption for three months. About 2.2–2.3mt is consumed domestically each month; however, it goes up to 2.5mt during festivals such as Diwali, Eid, and Holi.”
“After assessing the sugar production and stocks, we allowed sugar mills to convert their existing stocks of 670,000 tonnes of B-heavy molasses into ethanol,” the official added.
Additionally, the government is unsure of the next season’s crop.
“There could be a challenge in sugarcane crop next year. There is so much uncertainty in this market that nothing can be predicted. We thought the crop would be less this season but that has not been the case. If we assume that the crop would be good next season and it turns out the opposite, then what?
The rainfall forecast until June is below normal but it will improve thereafter. Reservoir levels have been shrinking. The crop must survive until arrival of the monsoons. Irrigating dead plants is not going to yield any results. Somehow these things are challenging,” the other official said.
“Yes, we are now comfortable; there is no surplus production of sugar. If there were, we would have allowed it for ethanol blending.”
Queries sent to the agriculture, consumer affairs, food and public distribution ministries remained unanswered.
India aims to meet its ambitious ethanol-blending targets—E15 by 2023-24 and E20 by 2025-26. At present, it stands at 12%.
Nageswaran said that for the Indian economy to register 7% growth in FY25, “a lot would depend on monsoons”
ISMA has pitched for the Centre to allow 2 mt of exports in the current marketing year ending September