Finance Secretary TV Somanathan confident nominal GDP growth is unlikely to be below 10.5%

TV Somanathan on GDP in budget 2024

The seventh budget of Nirmala Sitharaman and the maiden budget of the Modi government’s third term kept the nominal growth target unchanged at 10.5% for 2024-25. On whether a nominal growth target of 10.5%  at a time when inflation is still hovering around 7 per cent would imply that India could see sub 7 per cent growth for the fiscal year 2024-25, Finance Secretary T.V. Somanathan told Moneycontrol: “I am confident the nominal GDP growth is unlikely to be below 10.5%. If you have real growth of 6.5% and inflation of 4%, you have 10.5%, if your real GDP is 7%, inflation of 3.5%, you have 10.5%.”

Notably, T.V. Somanathan has been appointed as Cabinet Secretary for a two-year term beginning on August 30.

Nominal growth is inclusive of inflation while real growth is not. In FY 2023-24, India’s real GDP growth was at 8.2% while nominal growth was at 9.6%.

The Reserve Bank of India has projected a growth of 7.2% in FY 2024-25. The Economic Survey has given a conservative projection of growth between 6.5-7%.

On inflation, Somanathan added that he expects a combination of WPI and CPI to be between 3.5-4 per cent. The RBI has projected inflation to close at 4.55% in fiscal year 2024-25. The Economic Survey had noted that India’s short term inflation outlook as benign.