Will India's Domestic Policy Propel Growth Amid Economic Robustness?
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Synopsis
As tax cuts roll out and the RBI maintains its accommodative stance, India's economic landscape is poised for growth. With the IIP showing promising signs of recovery, experts highlight the resilience of the broader economy amidst challenges. Can India continue this upward trajectory?
Key Takeaways
- India's domestic policy is designed to boost economic growth.
- Recent tax cuts and rate reductions are key to stimulating the economy.
- The IIP's increase to 3 percent is a positive sign for industrial output.
- Infrastructure and construction sectors are leading the recovery.
- Controlled inflation allows for a supportive monetary policy from the RBI.
New Delhi, April 28 (NationPress) Experts indicate that India's domestic policy is set to bolster growth as tax reductions take effect this fiscal year while the Reserve Bank of India (RBI) continues to implement rate cuts. The Index of Industrial Production (IIP) saw an uptick to 3 percent in March, up from 2.9 percent in the preceding month.
The power sector demonstrated a significant 6.3 percent increase in output for the month, whereas the mining sector lagged with a growth of just 0.4 percent in March, according to data from the Ministry of Statistics.
“With a normal monsoon predicted and declining crude oil prices, external challenges are likely to be mitigated,” explained Dharmakirti Joshi, Chief Economist at Crisil Limited.
Recovery was spearheaded by infrastructure and construction goods, which recorded an 8.8 percent IIP growth in March, up from 6.8 percent the previous month, signaling an increase in government capital expenditure as fiscal 2025 closes.
Durable goods also rebounded with a growth of 6.6 percent compared to 3.7 percent, highlighting a rise in consumer purchasing power as food inflation decreases.
Export-driven sectors, including textiles, machinery, and petroleum products, experienced improved growth, likely due to anticipatory shipments before new tariffs take effect.
Emerging export segments, particularly computers and electronic products, saw a remarkable growth increase of 21.5 percent compared to 11.2 percent, also attributed to anticipatory frontloading, Joshi noted.
Mahendra Patil, Founder and Managing Partner of MP Financial Advisory Services, remarked that the FY25 IIP growth forecast of 4 percent shows stable industrial performance within a broader economic normalization.
“Although industrial growth has slowed, the overall economy remains strong, albeit slightly less vigorous than last year. A stable core sector, resilient tax revenues, and controlled inflation create a favorable environment for continued growth into FY2026. With inflation under management, the RBI has the capacity to maintain a supportive stance unless external pressures significantly escalate,” he added.
Point of View
It's crucial to recognize that India's economic policies are designed to foster stability and growth, even amid global uncertainties. The government's proactive measures, combined with the RBI's supportive monetary policy, underscore a commitment to maintaining a robust economic environment, ensuring that the nation continues to progress.
NationPress
17/06/2025
Frequently Asked Questions
What are the recent changes in India's domestic policy?
India has implemented income tax cuts and the RBI is continuing its rate cuts to stimulate economic growth.
How has the Index of Industrial Production (IIP) changed recently?
The IIP increased to 3 percent in March from 2.9 percent in the prior month, indicating a positive trend in industrial output.
What sectors are driving growth in India?
The power sector and infrastructure-related goods are leading the recovery, with notable growth in durables and export-oriented sectors.
What is the forecast for India's economic growth in FY25?
Experts predict an IIP growth of 4 percent for FY25, indicating stable industrial performance amid broader economic normalization.
How is inflation affecting India's economy?
Controlled inflation is providing the RBI with room to maintain an accommodative policy stance, supporting further growth.
