India's Economic Growth Projection

India's economy is poised for a 6.5% growth in the current financial year, according to the latest EY Economy Watch report. This optimistic outlook is supported by declining crude oil prices and stable inflation, despite the backdrop of rising global trade tensions and a slowing international economy.

Key Factors Influencing Growth

The report highlights four global factors impacting India's growth: reduced exports, a global slowdown, falling crude oil prices, and an oversupply in global production capacities. D K Srivastava, EY India's chief policy advisor, emphasizes the importance of fiscal and monetary policies in sustaining this growth while keeping inflation below 4%.

Opportunities and Challenges

With crude oil prices expected to remain between $60–65 per barrel, inflationary pressures may ease, benefiting domestic growth. However, exports face challenges from increasing global tariffs and weakening demand. The report suggests anti-dumping measures and a revised crude oil sourcing strategy, including more imports from the US, to mitigate these effects.

Strategic Recommendations

EY advocates for a comprehensive bilateral trade agreement with the US by late 2025 and stronger economic ties with the UK, EU, and other regions. Continued reforms in land and labor laws, alongside investments in education and emerging technologies like AI, are deemed essential for long-term growth.

Global Comparisons

The 6.5% growth projection aligns with estimates from the RBI and S&P Global Ratings, slightly above the IMF and World Bank forecasts. This comes as global trade faces uncertainty following new tariff announcements by the US.