Unlike last fiscal, when the advance gross domestic product (GDP) estimates exceeded growth projections, this fiscal’s progress remains below expectations.

While provisional estimates had boosted India’s GDP to an impressive 8.2% in fiscal 2024, a similar surprise to the first advance estimates of 6.4% for this fiscal is unlikely. Nominal GDP, which includes inflation impact, grew 9.7% - short of the budgetary expectation of 10.5%.

On the other hand, the global economy has shown resilience despite numerous challenges.

The global backdrop remains unclear, with multiple potential risks, such as the escalation of tariff wars as Donald Trump takes over the United States (US) presidency, posing new challenges for policymakers.

To be sure, inflation is decreasing, but it’s not fully under control. Currency volatility is up significantly of late not just in India but other emerging markets as well. India's current account deficit is in safe range, but portfolio flows have become volatile. High interest rates and expectations of fewer rate cuts by the Federal Reserve have drawn capital to the US, strengthening the dollar index.