BY VIVEK MISHRA AND PRANOY KRISHNA
BENGALURU — The Indian economy will grow a bit slower than previously thought this fiscal year, according to economists in a Reuters poll who said US tariffs have negatively impacted business sentiment, raising concerns about already weak private investment.
Gross domestic product (GDP) growth in the world’s fifth-largest economy is expected to average 6.3 percent this fiscal year, according to an April 15-24 Reuters poll of 54 economists, the same pace as expected for the year just ended.
This fiscal year’s forecast is a downgrade from 6.5 percent in a March poll but is slightly above the International Monetary Fund’s recently-updated forecast for 6.2 percent. But it is a dramatic slowdown from the fiscal year 2023-24 when the economy grew 9.2 percent.
Economists say beneath the headline growth numbers is an economy not generating enough well-paying jobs for millions of young people entering the labour market every year.
Despite the government stepping up its infrastructure spending, private sector investment has largely remained stagnant over the past decade which has generated growth well below the economy’s true potential.
A proposed 26 percent US tariff on Indian goods imports, currently paused for 90 days, is also not helping even though most of India’s exports to the US are services.
“Middle-class Indians are struggling. Residential building sales, passenger vehicles and two-wheelers (sales) have declined… It is important domestic policies focus on the root cause,” said Kunal Kundu, India economist at Societe Generale.
Kundu said “India needs a 1991 moment,” referring to a landmark campaign by former Prime Minister Manmohan Singh, then finance minister, to open up the economy to encourage foreign investment and competition.
