NEELKANTH MISHRA, Chief Economist of Axis Bank and Head of Global Research at Axis Capital, is a part-time Member of the Economic Advisory Council to the Prime Minister. In an interaction with Business Today, Mishra talks about the latest research report from Axis Bank and India's outlook for 2025, among other things. Edited excerpts:
How is India expected to perform on the economic front in 2025?
The big question on everyone's mind is, will the growth that we have seen in the first half of FY25 slow down? How much of this is a structural problem? How much of this is because of cyclical issues? We believe that almost all of this slowdown is because of cyclical issues. Trend growth remains at about 7%. What happened in the first six months of FY25 is an incredibly tight fiscal condition; generally in the first six months, the central government incurs about 62% of its full-year fiscal deficit. This year, it incurred only 29%... fiscal tightening is very bad for growth... 33% of 4.9% of GDP, which is the target fiscal deficit for this year, means that 1.6% GDP worth of fiscal consolidation was squeezed into just six months. Almost all of it was unintended... We expect that as the government catches up and meets its fiscal deficit target for the year, the tailwinds from that should support the economy in FY26.
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