The Indian economy is expected to achieve “higher” than 7% growth in 2024-25, the National Council of Applied Economic Research (NCAER) on Monday said pointing at strong high-frequency indicators, an above normal monsoon forecast and a benign global outlook.

The think tank’s outlook is a bit more optimistic than the 7% real gross domestic product (GDP) growth projected by the Reserve Bank of India (RBI) in its monetary policy review on April 5. While the Asian Development Bank (ADB) on April 11 projected India’s GDP growth for FY25 at 7%, the International Monetary Fund (IMF) on April 16 raised India’s growth forecast the fiscal year to 6.8% from 6.5%.

NCAER expects India to gain further boost from an improvement in the global GDP growth, which will create demands for Indian goods. IMF projected a resilient global economic outlook in its World Economic Outlook to 3.2% in 2025 from 3.1% in 2024. The World Trade Organisation (WTO) has also projected that the global merchandise trade volume will grow by 2.6% in 2024, following a 1.2% decline in 2023.

“Projected acceleration in both global growth and trade volumes as well as forecast of an above normal monsoon indicate that the Indian economy can again attain growth rates higher than 7% during the current fiscal year,” NCAER director general Poonam Gupta said.

Citing some high frequency indicators, NCAER in its monthly economic review said while PMI for manufacturing increased to 59.6 in March, it remained robust for services too, increasing to 61.2, showing signs of expansion of the economy. “Goods and Services Tax (GST) collections reached a value of Rs. 1.8 lakh crore in March 2024, the second best since its rollout in 2017, while UPI recorded 13.4 billion transactions (in volume) in March 2024, the highest ever since its introduction with a growth of 55.3% on a year-over-year basis,” it said.

The latest edition of EY Economy Watch released on Monday also has similar observations. “India’s FY25 growth continues the 7% plus post Covid performance for the fourth successive year,” EY chief policy advisor D.K. Srivastava said in the report.

“With an expectation of a normal south-west monsoon, the RBI expects a pick-up in rural activity backed by a favorable base effect, leading to pick up in growth of private consumption. It also expects the services sector to grow above the pre-pandemic trend. In its assessment, the prospects of fixed investment remain bright in view of healthy corporate and bank balance sheet and robust government capital expenditure which may have some crowding in impact,” he said. The budget presented on February 1 continued the government’s focus on capital expenditure to spur growth with an outlay of ₹11.11 lakh crore, over 11% year-on-year jump.

Both experts saw declining inflation as a positive factor. “CPI inflation eased marginally to 4.9% in March 2024 as inflation in fuel and light and food items eased. Core CPI inflation remained stable at 3.3% in March 2024. WPI inflation also remained low at 0.5% in March 2024, close to its level at 0.2% in February 2024,” Srivastava said.