"Domestic Consumption Growth Can Offset US Tariff Losses": Top Economist

Chief Economic Adviser V Anantha Nageswaran on Friday said India's domestic consumption growth can offset the US tariff-related losses, which is why the GDP estimates for the year 2025-26 haven't been revised downwards.

"After seeing the resilience of the growth in the first quarter and the data for the July numbers, we are maintaining our growth range for the full year," the CEA said, responding to a question from ANI during a virtual press conference when asked if he thinks Indian domestic markets will be able to offset US tariffs.

"Will the consumption growth or the higher-than-expected GDP growth offset the tariff-related negative effects? The answer is 'yes', which is why we said that we are not downgrading our growth estimate for the year (2025-26). We have kept the range at 6.3-6.8%. That gives you enough indication that despite the reciprocal tariff and the penal tariff having been imposed," he added.

In the Economic Survey for 2024-25, tabled in Parliament on January 31, the real GDP growth for 2025-26 was projected to be between 6.3 and 6.8 per cent.

Speaking about outlook, the CEA said high-frequency indicators for July 2025 indicate a carry-forward of Q1 economic momentum.

"Domestic demand is expected to strengthen in the upcoming quarters with the onset of the festive period and forthcoming GST rate changes," he said in his presentation.

Higher kharif sowing supported by above-normal rainfall, comfortable buffer stocks, and better output prospects for agriculture are expected to keep the food inflation benign, he further said.

A sovereign rating upgrade by S&P to BBB, according to Nageswaran, is a "well-deserved recognition of robust macro performance" and an indication of India's strong fundamentals.

"Task Force for Next-Gen Reforms, forthcoming GST changes, State deregulation and easing interest rates are expected to reduce borrowing costs, attract capital and boost consumption and investment. No revision is proposed to the growth forecast of 6.3% - 6.8% as of now."

However, near-term risks to economic activity, principally exports and capital formation, remain due to tariff-related uncertainties, he said.

India's real GDP has been estimated to grow by 7.8 per cent in the April-June quarter of the financial year 2025-26 over the growth rate of 6.5 per cent in the same quarter of the previous fiscal, official data showed Friday.

The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI), has released the Quarterly Estimates of Gross Domestic Product (GDP) for the April-June Quarter of financial year 2025-26.

In 2024-25, the Indian economy grew by 6.5 per cent in real terms. The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25.

In 2023-24, India's GDP grew by an impressive 9.2 per cent, continuing to be the fastest-growing major economy. According to official data, the economy grew 8.7 per cent and 7.2 per cent, respectively, in 2021-22 and 2022-23.

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