The CEA highlighted three major factors supporting this optimistic projection.
Robust Export Growth
The first key driver is India’s “good export performance,” the CEA observed. Excluding petroleum, gems and jewellry, merchandise exports have been growing at an impressive 10% rate. This steady rise, despite global economic uncertainties, indicates strong external demand and competitiveness in India’s non-traditional export sectors.
Government Capex Momentum
Another crucial factor is the government’s capital expenditure. According to financial accounts released today, the Union Government’s capex up to January has remained largely in line with the previous financial year, with nearly 75% of the allocated amount already spent.
The CEA acknowledged that while there was a slow start due to elections, capex has picked up significantly.
“So the government capex after the initial slow start because of elections has really picked up steam, in the fiscal third quarter, coming into the fourth quarter,” the CEA said. This increased government spending is expected to provide a further boost to economic activity.
Spending Surge from Mahakumbh
A likely unique contributor to economic growth this year can be the “huge spending” associated with the Mahakumbh. With an estimated 50–60 crore visitors participating in the religious gathering, significant additional expenditure has taken place, particularly in sectors like travel, hospitality, and local businesses. This surge in consumer spending is expected to meaningfully contribute to GDP growth from the expenditure side, the CEA observed.
Given these factors, the CEA argued that the implied 7.6% Q4 GDP growth is well within reach.
“In that sense the implied GDP growth number of 7.6% doesn’t look unrealistic”, Nageswaran said.
While India’s GDP growth in the October-December quarter stood at 6.2%—lower than the previous three years—it still outperformed peer economies. Also, growth across sectors has remained broad-based.
“In general all the three sectors of the economy are doing well, there is no lopsided dependence on any one sector “, Nageswaran observed.
