Chief Economic Advisor of India has said that the Indian economy will grow at the upper end of 6.3-6.8 percent. He said he is confident of the growth estimates of the Economic Survey, based on several multifaceted and complex reasons. Primarily, the GDP growth is said to be accelerated because of the GST reforms introduced recently.
Anantha Nageswaran, the current CEA to the Prime Minister, made this statement at the Network 18 Event. During the event, Anantha made several remarks expressing confidence in the growth estimates of the Finance Minister. He also said, “The total amount of taxes foregone is exactly the amount of saving that households are making, coming on top of the direct tax relief,". This was inthe context of the GST reforms introduced.
He also said other things about the Indian economy, which have been summed up in this article.
Will GST Cuts Reduce States’ Revenues?
On the issue of several State governments raising their voices against GST cuts, citing loss in revenue. Anantha Nageswaran said past rate reductions in GST had not depicted a major fiscal revenue fall for states. Adding that the drop in revenue will be covered by the increased transactions due to consumer spending. Lastly, to address the concern of state governments, he mentioned that “UPI transactions are growing 20–30 per cent year-on-year and have a high correlation with GST collections. With rate cuts, volume growth will dominate,".
Is the Fiscal Deficit Reducing?
Anantha was questioned on the government of India's targets to reduce Fiscal Deficit. To which he said that the government is on course to reduce the Fiscal Deficit to a mere 4.4 percent of GDP. The increase in Non-Tax revenues and increased consumption during the festive season will aid in reducing deficits. Meanwhile, some economic indicators predict a 7 percent GDP growth, although he didn't endorse it.
Turbulence of Tariffs?
When asked about the great uncertainties in global financial markets due to tariffs. Anantha said the Indian exports might take a hit due to US tariffs being levied; however, the GST reforms revenue will minimise it. The GDP growth figures might have wandered by about 0.4-0.5 percent from the current estimates if the GST reforms were not introduced. The big uncertainty surrounding the damage from tariffs has also been reduced.
H-1B Fees Hike a Concern?
US President has just hiked the H-1B Visa fees by 50 percent. Speaking on this, Anantha said that the visa fee hike would only take place by 2026. Moreover, he boiled down the concerns surrounding the HIRE bill, which aims to levy high taxes on companies outsourcing work to India. He said that the Outsourcing Bill is a "private initiative" and might not become a law.
Is FDI Still Flowing Into India Despite Global Tariffs?
The battering of US tariffs have scared foreign investors from investing in India, as reported by several Western media outlets. Anantha, however, said that the confidence of investors has not waned. Adding that almost 25 billion dollars worth of FDI inflows were reported in the first quarter of this financial year. This makes the annual FDI inflow amount at around 100 billion dollars higher than the previous year's 80 billion dollars. Lastly, he said that India's position in the "China Plus One" strategy of several western companies is a great one.