Indian economy likely to grow 7% next financial year: Ministry of Finance

New Delhi, India – The Indian economy is projected to grow close to 7% in the financial year 2024-25 that starts this April, said the Ministry of Finance in its monthly review report.

The strength of domestic demand has driven the economy to a 7% plus growth rate in the last three years.

India's economy grew 7.2% in 2022-23 and 8.7% in 2021-22. The Indian economy is expected to grow 7.3% in the current financial year 2023-24, remaining the fastest-growing major economy.

The robustness seen in domestic demand – private consumption and investment – traces its origin to the reforms and measures implemented by the government over the last 10 years, said the report issued by Department of Economic Affairs.

"The supply side has also been strengthened with investment in infrastructure - physical and digital - and measures that aim to boost manufacturing. These have combined to provide an impetus to economic activity in the country," the review report noted.

"Accordingly, in financial year 2024-25, real GDP growth will likely be closer to 7%."

There is, however, considerable scope for the growth rate to rise well above 7% by 2030, the report added.

"The rapidly expanding digital infrastructure is continuously improving institutional efficiency. Technological progress is picking up pace with rising collaboration with foreign partners in the production of goods and services. Decisive steps have been taken to speed up human capital formation. Finally, the overall investment climate is increasingly becoming more favourable with sustained enhancement in the ease of doing business," the ministry said.

In the next three years, India is expected to become the thirdlargest economy in the world, with a GDP of $5tn, it asserted. India can aspire to become a $7tn economy in the next six to seven years (by 2030), it added.

"This will be a significant milestone in the journey to delivering a quality of life and standard of living that match and exceed the aspirations of the Indian people."

Firm GDP growth forecasts, inflation at manageable levels, political stability at the central government level and signs that the central bank is done tightening its monetary policy have all contributed to painting a bright picture for the Indian economy.