India ‘clearly has problems’ in finding new impetus for economic growth | Wilnesh News

Despite India’s rapid economic expansion, “clearly there are problems” in finding new drivers of economic growth, JPMorgan’s Jahangir Aziz said after looking at the country’s union budget.

“If you look at the growth that India has recorded in the last two years post-pandemic, it has been very strong. But if you look at the drivers of growth, it is essentially these two: public infrastructure and exports of services,” A Zitz, chief emerging markets economist at JPMorgan Chase, told CNBC’s “Street Signs Asia” on Tuesday.

India’s finance minister said on Tuesday that capital expenditure in fiscal 2025 will be 11.11 trillion rupees ($133.9 billion), or 3.4% of GDP, to support India’s ambition to strengthen physical and digital infrastructure and strive to become a developed country by 2047 .

It is estimated Ministry of Industry and CommerceIndia’s services exports were likely to reach $30.3 billion in June, compared with $27.8 billion in the same month last year.

“Service exports have stabilized at a higher level and are not growing as fast as a few years ago,” Aziz said, adding that the government should focus on increasing private investment and boosting consumption.

“It will be difficult for India to continue to maintain a growth rate of 6% to 7% in terms of public infrastructure and services exports alone…The question is, can India expand its growth momentum to consumption, but more importantly private investment? We have been Haven’t seen anything like this happen for a long time.

India’s chief economic adviser V Anantha Nageswaran said on Monday that the economy is expected to grow between 6.5% and 7% in fiscal 2025, lower than the Reserve Bank of India’s 7.2% growth forecast.

According to the International Monetary Fund’s latest World Economic Outlook, the country’s economic growth is expected to It will drop to 6.5% in 2025.

Raghuram Rajan, a professor at the University of Chicago Booth School and a former governor of India, warned that although India’s large young population is guiding the country to become the world’s third-largest consumer market by 2027, if high unemployment It is unlikely to hinder India’s consumption growth.

According to statistics, the country’s unemployment rate climbed to 9.2% in June from 7% the previous month. center for monitoring indian economy.

“Consumption growth has been relatively modest over the past few quarters, and unless people become more confident that they have jobs and good-paying jobs, you’re going to find that’s going to be a drag on economic growth,” Rajan said.

He questioned employment initiatives announced in Tuesday’s budget, such as a pledge to train two million young people over five years and provide monthly wages of about 15,000 rupees ($179) to workers entering the labor market for the first time.

“Are they at the scale that India needs, given the huge concerns about job losses?”