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NITI Aayog member Arvind Virmani has said that the India’s gross domestic product (GDP) will grow around 7 per cent in the current fiscal year (FY25) and is on track to maintain a similar growth rate for several years. He said there are new challenges facing the country and they will have to be dealt with. Recently, the Reserve Bank of India (RBI) pegged the FY25 GDP growth rate at 7.2 per cent.

Talking on the decline in private consumption expenditures in the last fiscal year, Virmani said ‘it is actually recovering now. The effect of the pandemic was to draw down savings... and very different from previous financial shocks’. Explaining further, he said ‘it is like what he calls a double drought situation. We also had, of course, El Nino last year, but what the pandemic did was that it resulted in people having to draw down their savings... So, the obvious reaction is to rebuild your savings, which tend to reduce current consumption’.

On the decline in foreign direct investments (FDI) to India, despite it being the fastest growing economy, he said riskless return of investment is much higher in the US and other developed countries than in emerging markets. He said ‘as soon as interest rates begin to come down in the US, I expect the FDI into emerging markets, including India, to increase’.