Imperial Towers is a twin-tower residential high-rise and business district development located in Tardeo South, Mumbai, India.
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India is “clearly having problems” finding new drivers of economic growth despite its rapidly expanding economy, Jahangir Aziz of JPMorgan said after the country’s federal budget.
“If you look back at the last two years of India post-pandemic, you’ve seen record growth. But if you look at what’s driving that growth, it’s essentially two things: public infrastructure and services exports,” Aziz, JPMorgan’s chief emerging markets economist, said on CNBC’s “Street Signs Asia” on Tuesday.
“Services exports have remained stable at high levels but are not growing as fast as they did a few years ago,” Aziz said, adding that the government should focus on increasing private investment and boosting consumption.
“It’s going to be very hard for India to sustain a 6-7 percent growth rate based on public infrastructure and services exports alone…The question is whether India can broaden the engine of growth to include consumption and, crucially, private investment, something we haven’t seen in a long time.”
India’s chief economic adviser V. Ananta Nageswaran said on Monday that the economy is expected to grow at 6.5-7 percent in fiscal 2025, below the Reserve Bank of India’s forecast of 7.2 percent growth.
According to the International Monetary Fund’s latest World Economic Outlook, the country’s growth rate is projected to slow to 6.5% in 2025.
India has a young population and is expected to become the world’s third-largest consumer market by 2027, but consumption is unlikely to grow if high unemployment gets in the way, warned Raghuram Rajan, a professor at the University of Chicago Booth School and former governor of the Reserve Bank of India.
The country’s unemployment rate rose to 9.2% in June from 7% the previous month, according to the Centre for Monitoring Indian Economy.
“Consumption growth has been relatively slow over the past few quarters and unless people are more confident that they have jobs and they’re in well-paying jobs, that will drag on growth,” Rajan said.
The prime minister questioned employment measures announced in Tuesday’s budget, including a promise to train two million young people over five years and providing a month’s wages of about 15,000 rupees ($179) to employees joining the workforce for the first time.
“Are they on a scale that India needs, given the huge concerns over unemployment?”
