Growth rate of about 7% next year eminently doable, says DEA secretary

Economic Affairs Secretary Ajay Seth on Friday said Budget proposals are non-inflationary and will help achieve 7 per cent-plus growth rate for the fourth year in a row in 2024-25.

Although there are external risks arising from geo-political tensions, "the growth rate of about 7 per cent next year is eminently doable," Seth told PTI in a post-Budget interview with PTI.

Having contracted 5.8 per cent in 2020-21, the Indian economy recorded a growth rate of 9.1 per cent in the following year. The Gross Domestic Product (GDP) growth rate was 7.2 per cent in 2022-23 and is estimated to inch up marginally to 7.3 per cent in the current financial year.

The interim Budget 2024-25 projected a nominal GDP growth 10.5 per cent against the 11 per cent for the current fiscal.

The nominal GDP for BE 2024-25 has been projected at Rs 3,27,71,808 crore, assuming 10.5 per cent growth over the estimated nominal GDP of Rs 2,96,57,745 crore, as per the First Advance Estimates of FY24.

"The estimates, which we have assumed are 10.5 per cent, and which we feel is a realistic estimate of normal growth rate for the next year," Seth said.

As far as the current fiscal is concerned, he said, the economy is doing very well and the policies, the fiscal stance, as well as the emphasis on capital expenditure will have much higher multiplier effect and generate employment.

The government has hiked capital expenditure (capex) by 11.1 per cent to Rs 11.11 lakh crore for the next financial year from Rs 9.5 lakh crore estimated for the current financial year.

He said the government has taken prudent measures to keep the total expenditure under check.

The size of Budget 2024-25 has increased 6.1 per cent to Rs 47.66 lakh crore as against the Revised Estimate of the total expenditure is Rs 44.90 lakh crore for the current financial year.

With regard to fiscal deficit, Seth said it is 10 basis points less than the 5.9 projected earlier this financial year.

As far as the next year is concerned, "the government is adhering to the fiscal consolidation path announced by the Finance Minister three years ago... now moving forward we see fiscal deficit to be moderating to 5.1 per cent (FY25)".

Tax buoyancy and realistic estimate of expenditure will help meet the realistic target of fiscal deficit of 5.1 per cent of GDP, he said.

"If you recall the numbers, the nominal growth rate assumption is 10.5 per cent while the growth rate in taxes is 11.5 per cent. The second one is a realistic estimate of the expenditure. At the same time, the economy doing well also helps (in achieving 5.1 per cent)," he said.